The Legislative Budget Board staff has published its Executive Summary of Legislative Budget Board Reports which also includes reports from the biennial Texas State Government Effectiveness and Efficiency Review: Selected Issues and Recommendations (GEER).

Please see below for a spotlight on a few of the LBB recommendations and findings. Reports from the GEER report will be designated. A complete report of all finding in the Executive Summary can be found on the Legislative Budget Board site.

ECONOMIC

Modify the Texas Medical Liability Joint Underwriting Association – GEER Report

• Amend statute to reduce risk to medical consumers resulting from JUA by modifying the association using one of the following options: (1) suspend operations of JUA; (2) remove JUA from statute and privatize the entity; or (3) require the Texas Department of Insurance to develop more rigorous underwriting standards.
• Amend statute to establish a method for distribution of the JUA’s surplus funds to: (1) the state for appropriation by the Texas Legislature; and/or (2) current and prior policy holders through an unclaimed property process.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of these recommendations. These recommendations require statutory changes.

Define and Establish Penalties for Worker Misclassification – GEER Report

• Amend statute to clarify the definitions of employee and independent contractor by including a rebuttable presumption of employee status.
• Amend statute to give TWC the authority to assess penalties for misclassification in the private market.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of these recommendations. These recommendations require statutory changes.

Modify Equity Appeals for Property Appraisals to Ensure Uniformity – GEER Report

• Amend statute to use deviation from the median appraisal ratio instead of median appraised value as the basis to determine equal and uniform appraisal.
• Amend statute to establish standards for what defines comparable property, limit comparable properties to those in the same appraisal district, require adjustments to be based on general appraisal standards, and establish which appraised value is used at each stage of protest and appeal.
• Amend statute to require the Texas Comptroller of Public Accounts to establish standards for development and calibration of adjustments for industrial, petrochemical refining and processing, utility properties, and other unique properties by rule.
• Amend statute to require a property owner who loses an equity lawsuit to pay an appraisal district’s attorney fees to make this requirement consistent for both property owners and appraisal districts.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of these recommendations. These recommendations require statutory changes.

Modify Agricultural Land Appraisal Protocols – GEER Report

• Amend statute to require the CPA to establish minimum acreage requirements by land classification and region to qualify as open space by rule.
• Amend statute to require the CPA to update the Texas Property Tax Manual for the Appraisal of Agricultural Land by December 31, 2016, and at least once every 10 years thereafter, and remove certain approval requirements.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of these recommendations. These recommendations require statutory changes.

Improve Oversight of Funds Related to the Deepwater Horizon Oil Spill – GEER Report

• Include a rider that requires agencies that receive, expend, or conduct projects using Deepwater Horizon oil spill-related funds to submit quarterly reports to the Legislative Budget Board. These reports will identify amounts, funding sources, and projects.
• Include a rider that requires any agency that intends to expend at least $1.0 million for a project or program using Deepwater Horizon oil spill-related funds deposited to the state Treasury to submit an expenditure request to the Legislative Budget Board and the Office of the Governor for approval.
• Within each chamber’s finance or appropriations committee, the Legislature should consider establishing a standing subcommittee to provide oversight for exceptional fiscal or policy matters such as the influx of oil spill-related funds. The subcommittees could meet with relevant policy committees as necessary to receive testimony and updates from agencies.

The introduced 2016–17 General Appropriations Bill includes a rider implementing Recommendations 1 and 2. Recommendation 3 could be implemented by each legislative chamber’s finance or appropriations committee.

Overview of the Economic Stabilization Fund – GEER Report

• The balance of the ESF on December 15, 2014, was $8.5 billion, equivalent to 17.5 percent of the fiscal year 2015 General Revenue Funds budget.
• Transfers from the General Revenue Fund to the ESF linked to oil production tax and natural gas tax collections have contributed 86.8 percent of all revenue deposited to the fund.
• The transfer to the ESF based on the unencumbered General Revenue Fund balance at the end of each biennium has not been a reliable source of revenue.
• The ESF cap for the 2014–15 biennium is $14.1 billion, equivalent to 29.1 percent of the fiscal year 2015 General Revenue Funds budget.
• Appropriations from state stabilization funds during economic downturns do not necessarily affect state bond ratings. During the last recession, states that had the highest bond ratings and appropriated significant portions of their stabilization funds did not receive lower bond ratings.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of this report. This report does not include any recommendations.

Further Reduce Reliance on General Revenue–Dedicated Accounts for Certification of the State Budget

• Amend statute to require CPA to publish a report regarding the General Revenue–Dedicated accounts that are counted for certification of General Revenue Fund appropriations after the end of each regular session of the Texas Legislature.
• This amendment would codify current practice to ensure continued availability of this information.
• Implement additional account-specific measures to reduce reliance on General Revenue–Dedicated accounts for certifying appropriated General Revenue Funds by adjusting revenue, increasing appropriations, or modifying uses of dedicated revenue.

The introduced 2016–17 General Appropriations Bill includes adjustments for account-specific measures proposed in Recommendation 2. Recommendation 1 requires a statutory change. Additional account-specific measures proposed in Recommendation 2 could be implemented through statutory changes or changes to the General Appropriations Bill.

HEALTH CARE

Align New Graduate Medical Education Funding with the Healthcare Needs of the State – GEER Report

• Amend statute to establish a critical shortage physician program at THECB.
• Include a contingency rider to appropriate $19.8 million in All Funds to THECB to implement a critical shortage physician program.
• Increase appropriations by $500,000 in General Revenue Funds to the Texas Department of State Health Services and include a rider to direct the Health Professions Resource Center to conduct research about the physician workforce.
• Increase funding to THECB for the Primary Care and Family Medicine Residency programs by $15.4 million in All Funds.
• Amend statute to establish a teaching health center GME program at THECB.
• Include a contingency rider to appropriate $16.2 million in All Funds to THECB to implement a teaching health center GME program.
• Amend statute to establish a GME partnership grant program at THECB for community health clinics to receive guidance from medical schools or other established institutions when beginning the accreditation process for a new medical residency program.
• Include a contingency rider to appropriate $6.0 million in All Funds to THECB to implement the GME partnership grant program. 9Increase appropriations by $1.4 million in All Funds to THECB to develop physician faculty. 10Include a rider to require THECB to provide a report about the impact of new funding for graduate medical education and submit this report to the Legislative Budget Board and the Office of the Governor.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of these recommendations. Recommendations 1, 5, and 7 require statutory changes. The remaining recommendations require appropriations or riders.

Improve the Evaluation and Administration of the Medicaid Adult Substance Use Disorder Treatment Benefit – GEER Report

• Amend the existing rider on Medicaid Substance Abuse Treatment to require HHSC to evaluate the impact of the adult Medicaid substance use disorder benefit on overall Medicaid spending and client outcomes.
• Amend statute to require HHSC to implement eff orts to increase awareness of Medicaid substance use disorder treatment services.
• Amend statute to require HHSC to streamline the process used to authorize Medicaid substance use disorder treatment services.
• Amend statute to require HHSC to determine whether quantitative limitations on the amount of substance use disorder treatment services can and should apply to adult clients in the Texas Medicaid program. If the agency determines that limitations can and should be applied, the limitations should be properly established in the Medicaid state plan and the Uniform Managed Care Contract by September 1, 2015.

The introduced 2016–17 General Appropriations Bill includes a modification to an existing rider to implement Recommendation 1. Recommendations 2, 3, and 4 require statutory changes.

Evaluate Pay for Quality Measures in the Texas Medicaid Program – GEER Report

• Include a rider directing HHSC to evaluate how Texas Medicaid providers and MCOs use existing pay for quality measures to improve healthcare delivery and whether the measures result in a higher quality of care and improved health outcomes. The rider also would require HHSC to report findings to the Governor, the Legislative Budget Board, and the appropriate standing committees of the Legislature by December 1, 2016. The report should indicate: (1) efforts undertaken to make the current pay for quality methods more effective; and (2) how HHSC will apply improvements in pay for quality methods if they are expanded into outpatient settings.

The introduced 2016–17 General Appropriations Bill includes a rider implementing this recommendation.

Improve Transparency in STAR Managed Care Payment Rate Setting – GEER Report

• Amend statute to require HHSC to more clearly describe and demonstrate the methodology by which STAR payment rates are set.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of this recommendation. This recommendation requires statutory change.

Improve Rate Setting and Data to Allow Comparison of PACE to STAR+PLUS – GEER Report

• Amend statute to direct HHSC to modify the Texas Medicaid rate-setting process for PACE to ensure: (1) PACE Medicaid rates are adequate to sustain the program; (2) PACE Medicaid rates do not exceed the reasonable and necessary costs to operate PACE; and (3) the program is cost neutral relative to serving a person in the Medicaid STAR+PLUS managed care program.
• Amend statute to direct HHSC and DADS to modify data collection for PACE and STAR+PLUS to allow for a comparison of Medicaid client outcomes across these models.
• Amend statute to direct HHSC, in collaboration with DADS, to evaluate how PACE Medicaid costs and client outcomes compare to STAR+PLUS and to submit a report to the Legislative Budget Board and the Offi ce of the Governor by December 1, 2016.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of these recommendations. These recommendations require statutory changes.

Improve Data and Oversight to Reduce the Prevalence of Early Elective Deliveries of Newborns – GEER Report

• Include a rider requiring DSHS to modify the methodology it uses to estimate the rate of early elective deliveries in Texas to include the use of administrative claims for all payer types contained in the Texas Health Care Information Collection data combined with birth certificate data.
• Include a rider requiring DSHS to annually report on its website state-estimated summary data regarding the rate of elective early deliveries. The rate should be reported by payer type and health service region, and by facility if allowed by state and federal law.
• Include a rider requiring the Texas Health and Human Services Commission to regularly audit claims submitted in the Texas Medicaid fee-for-service and managed care programs for obstetric delivery procedures that include a modifier indicating that the delivery was medically necessary and before 39 weeks of gestation.
• Include a rider requiring the Texas Health and Human Services Commission, in collaboration with DSHS, to evaluate the effectiveness of strategies to reduce early elective deliveries using improved data and audit results and submit a report to the Legislative Budget Board and the Office of the Governor by December 1, 2016.

The introduced 2016–17 General Appropriations Bill includes a rider implementing these recommendations.

ENVIRONMENT

Improve Available Information on Brackish Groundwater for Water Planning – GEER Report

• Amend statute to require the Texas Groundwater Protection Committee to adopt a standardized groundwater classification system through rulemaking, and require state agencies and groundwater conservation districts to reference this system.
• Amend statute to require the Railroad Commission of Texas to annually provide electronic well log data to the Texas Water Development Board.
• Amend statute to require the Texas Water Development Board to adopt standards and methodologies to ensure that groundwater conservation districts are using a standardized approach when formulating their individual or shared desired future conditions.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of these recommendations. These recommendations require statutory changes.

Improve State and Local Drought Planning to More Effectively Manage Water Resources – GEER Report

• Amend statute to require entities that are required to notify TCEQ about their drought contingency plan implementation to also notify the agency when they alter or lift drought restrictions.
• Amend statute to require TCEQ to post certain information on its website related to the condition of drought a public water supplier is undergoing and actions the supplier is taking to mitigate reduced water supplies.
• Amend statute to expand the powers and duties of the state’s Water Conservation Advisory Council to include the monitoring and development of strategies that address drought conditions, and to assist the Texas Water Development Board and TCEQ with the development of best management practices for drought.
• Amend statute to require entities that complete drought contingency plans to include detailed information regarding prior drought response and the effectiveness of those measures in additional iterations of their plans.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of these recommendations. These recommendations require statutory changes.

Revenue Enhancement Options for the Water Resource Management Account – GEER Report

• Include a rider specifying that appropriations to TCEQ, PUC, and OPUC are contingent on balances and available revenues to the Water Resource Management Account being sufficient to cover appropriations from the account for the 2016–17 biennium. The rider also would direct TCEQ to increase fee rates based on an evaluation that TCEQ would conduct pursuant to Recommendation 3, if that recommendation is implemented.
• Amend statute to redirect some of the fee revenues from the WURA to the General Revenue Fund in an amount necessary to cover appropriations and related employee benefits costs at the PUC and OPUC.
• Direct TCEQ to conduct a study to determine the level of agency workload related to each group of fee payers and the relative benefit each fee payer group receives from agency water -related activities. Using this analysis, the agency should develop a methodology to determine the appropriate fee rates for water-related fees, which would generate revenue in proportion to agency workload and fee payer benefits.

The introduced 2016–17 General Appropriations Bill includes a rider implementing portions of these recommendations. Some of the recommendations require statutory changes.

Overview of Responsibilities and State Oversight of River Authorities – GEER Report

• TCEQ has statutory authority to supervise most activities of river authorities. From the agency’s perspective, there are no gaps in state oversight of river authorities.
• The board of directors for a river authority is typically appointed by the Governor, with the advice and consent of the Senate. River authority boards range from 5 to 25 members, with approximately 11 members on average.
• Four of 17 river authorities are permitted the majority of water in their designated basins. Some river authorities are not directly permitted any surface water.
• TCEQ is the state’s water oversight agency for surface water regulation, including the permitting and usage of water. The agency may also establish a watermaster program in areas of the state where concerns regarding proper water usage may arise.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of this report. This report does not include any recommendations.

Overview of Impacts of Hydraulic Fracturing in Texas

• Nearly 50 percent of all liquid (crude oil and condensate) and dry gas production in the state for calendar year 2013 was from horizontal wells located in Texas shale plays. During the past 10 years, oil and gas production from horizontal wells in Texas shale plays increased from less than 1 percent and 2 percent to 47 percent and 45 percent of statewide liquids and natural gas production, respectively.
• Driven by production of unconventional oil and gas resources, state revenue attributable to the oil and gas industry has increased over the last decade. State revenue related to the oil and gas industry from all sources—severance, sales and franchise taxes, and income from oil and gas production on state-owned lands—exceeded $7.4 billion for fiscal year 2013.
• Property value growth in shale play regions is affecting state aid formulas for public education. Based on preliminary data, recapture for fiscal year 2014 is expected to total approximately $1.2 billion, with 49 percent coming from school districts located in shale plays.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of this report. This report does not include any recommendations.

EDUCATION

Ensure Solvency and Accountability of the Teacher Retirement System Retiree Insurance Fund – GEER Report

• Amend statute to allocate the projected cost to maintain TRS-Care funding solvency as follows: 50 percent to an increase in the state contribution, and 12.5 percent each to increases in active member and school district contributions, for the 2016–17 biennium. 2Include a contingency rider appropriating additional General Revenue Funds, refl ecting an increase in the state contribution rate that provides 50 percent of the TRS-Care projected solvency cost, and deleting a specifi c school district contribution rate in the General Appropriations Bill. 3Delete the rider expressing legislative intent that TRS not increase retiree premiums from the 2016–17 General Appropriations Bill. 4Include a contingency rider requiring TRS to take appropriate actions, such as premium increases and plan design changes, to offset at least 25 percent of the projected cost to maintain the TRS-Care fund’s solvency for the 2016–17 biennium. Direct TRS to submit a report to the Legislative Budget Board and the Governor describing premium and/or plan design changes prior to implementation. 5Amend statute to require TRS to produce an annual report identifying and describing each of its major cost containment features and indicating the savings they generate. The goal of the report will be to inform the public of TRSCare cost containment and fraud prevention efforts that also support high-quality health insurance for retirees and their dependents.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of these recommendations. Recommendations 1 and 5 require statutory changes, Recommendation 2 requires appropriations, Recommendations 2 and 4 require contingency riders, and Recommendation 3 requires deletion of a rider.

Increase Fiscal Accountability and Transparency of School Districts’ General Fund Balances – GEER Report

• Amend statute to require TEA to reinstate a requirement that school districts maintain minimum general fund balances and require school districts to publicly report the intended use of general fund balances in excess of a certain percentage of operating expenditures.
• Amend statute to require school district boards of trustees to formally adopt general fund balance policies.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of these recommendations. These recommendations require statutory changes.

Trends in the Number and Salaries of Administrators in Texas Public Schools – GEER Report

• From school years 2004–05 to 2012–13, the total number of public school administrators in Texas increased by an average of 1.9 percent annually. This average annual increase was greater than the 1.2 percent average annual increase in total number of school employees during this period.
• From school years 2004–05 to 2008–09, the rate of growth for the number of school administrators exceeded the rate of enrollment growth. That trend reversed in 2009–10, when the annual rate of enrollment growth exceeded the rate of growth among administrators.
• The average annual increase in the total number of public school administrators statewide was 0.6 percentage points greater than the increase in numbers of teachers, 1.2 percentage points greater than auxiliary staff, and 1.7 percentage points greater than educational aides. However, the increase in number of professional support staff was 1.0 percentage points greater than that of administrators.
• Statewide, the average salary of public schools’ central office administrators increased by an annual average of 2.3 percent from school years 2004–05 to 2012–13. This increase was greater than the increase in salaries of campus-level administrators (1.7 percent), teachers (2.1 percent), and professional support staff (1.9 percent).

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of this report. This report does not include any recommendations.

TRANSPORTATION

Enhance the Process Used to Remove Nonintegral Roads from the State Highway System – GEER Report

• Amend statute to require TxDOT to establish criteria to identify best candidate roads for the turnback program and develop detailed and consistent procedures to guide the transfer process in collaboration with stakeholders.
• Amend statute to require an annual review of roads in eligible communities by a city, its municipal planning organization, and TxDOT using established criteria to determine roads with potential to be transferred voluntarily. Best candidate roads and any roads planned for transfer would be included in district Department Work Programs.
• Include a rider requiring TxDOT to report key performance information regarding the turnback program to the Legislative Budget Board and the Office of the Governor to ensure accountability and assess program eff ectiveness.

The introduced 2016–17 General Appropriations Bill includes a rider to implement Recommendation3. Recommendations 1 and 2 require statutory changes.

Improve the Operations and State Oversight of Overweight Corridors – GEER Report

• Amend statute to require TxDOT to set baseline requirements to determine the feasibility, viability, and economic impact of potential overweight corridors and use these requirements to periodically develop recommendations for any additional overweight corridors that would be beneficial for the state.
• Amend statute to require TxDOT to work with stakeholders to establish performance measures for each corridor and require that results be reported to TxDOT and the Legislature to allow for an evaluation of the corridor’s effects on freight movement.
• Amend statute to authorize DMV to issue overweight corridor permits on behalf of local entities and to authorize DMV to establish a fee in an amount sufficient to recover the actual cost of issuance.
• Amend statute to require TxDOT to complete a pavement management plan for each operational corridor to ensure all parties have information regarding the long-term cost of maintaining corridors Amend statute to require local entities to consider the pavement management plan provided by TxDOT when setting permit rates.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of these recommendations. These recommendations require statutory changes.

Options to Increase Revenue Available for Transportation Infrastructure – GEER Report

• During the 2014–15 biennium, TxDOT was appropriated $21.2 billion in All Funds to administer the state’s transportation system, including $9.0 billion in Other Funds (State Highway Fund).
• Traditional methods of financing for highway construction and maintenance include revenues from state motor fuel taxes, oversize/ overweight vehicle permits, motor vehicle sales and use tax, and motor vehicle registration fees. Other financing methods used for highway construction and maintenance in Texas include the use of bond proceeds, toll revenues, and public-private partnerships.
• It is estimated an additional $5.0 billion in revenue is needed to maintain road and bridge conditions and congestion at 2010 levels. Th is estimate does not account for the funding needs of other modes of transportation.

The introduced 2016–17 General Appropriations Bill includes adjustments to implement the options relating to reducing State Highway Fund appropriations to agencies other than TxDOT. Other options require statutory changes.

Options to Fund Energy Sector Transportation Repairs – GEER Report

• New technologies expand the areas in which exploration and production of oil and gas is economically feasible. Th is activity often takes place in rural or suburban areas of the state in which roads are not designed or constructed for a high level of industrial activity. ¨ Energy sector activity typically brings a substantial increase in traffic of both passenger vehicles and oversize or overweight vehicles. Roads that were intended for 100 vehicles per day may now have 1,000 oversize or overweight vehicles per day. Increased traffic can deteriorate roads decades more quickly than originally estimated. ¨ Damaged or inadequate roads can cause issues related to traffic and public safety. Th e estimated annual cost to the state to repair roads that are damaged by energy sector activity and are rated below good condition is from $1.0 billion to $2.0 billion.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of this report. This report includes options that require statutory changes.

OTHER

Increase Transparency of Discretionary Transfers from the School Land Board’s Real Estate Special Fund – GEER Report

• Amend statute to require SLB to adopt a rule that establishes a procedure to determine the amount of transfers to the Available School Fund and to the SBOE-controlled portion of the Permanent School Fund.
• Amend statute to require SLB to notify CPA, SBOE, and the Legislative Budget Board of the amount and timing of transfers to the Available School Fund and to the SBOE-controlled portion of the Permanent School Fund for the next biennium, by September 1 of each even-numbered year.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of these recommendations. These recommendations require statutory changes.

Overview of Server Consolidation Within Data Center Services – GEER Report

• For the 2014–15 biennium, appropriations to the Statewide Technology Account totaled $388.1 million in Interagency Contracts for Data Center Services. The Legislature has appropriated $1.3 billion for this program since implementation in the 2006–07 biennium.
• The per unit prices the vendor charges agencies are determined by total state consumption. As agencies consolidate and consume services above the estimated baseline within the state data center, the per unit price the state pays for a given service decreases.
• The contractual obligation for the service providers to maintain consolidation capacity ends in August 2016. After August 2016, servers may still be consolidated as part of other services included in the contract, but agencies may have to pay additional costs for labor or project management.
• Consolidating a server requires preparation work by agencies and cooperation between the agency and service providers. Applications on some agency servers must be remediated before they can be consolidated, which can require additional resources from the agency.

The introduced 2016–17 General Appropriations Bill does not include any adjustments as a result of this report. This report does not include any recommendations.