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F I S C A L I M P A C T R E P O R T

SPONSOR Rodriguez

DATE TYPED 2-24-05

HB

SHORT TITLE Tele-Work Program for Certain Home Businesses

SB 406

ANALYST Segura

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$47.9

Non-Recurring General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

Relates to Division of Vocational Education Division of the Public Education Department

Appropriation in the General Appropriation Act

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

$431.1

Non-Recurring Federal Funds

(Tele-work )

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates HB 321

SOURCES OF INFORMATION

LFC Files

Responses Received From

Division of Vocational Rehabilitation (DVR)

Governor’s Commission on Disabilities (GCD)

Developmental Disabilities Planning Council (DDPC)

SUMMARY

Synopsis of Bill

Senate Bill 406 appropriates $47.9 thousand to the Vocational Rehabilitation Division for ex-

penditure in FY06 to match federal money for the Tele-work Program that provides loans for the

Senate Bill 406 -- Page 2

purchase of equipment needed to start home business by persons with disabilities or for an em-

ployee with a disability to work from remote locations.

Significant Issues

Refers to HB 321. The appropriation in this bill will be used to obtain a nine-to-one federal

match for the Tele-work Program thereby generating a $431.1 thousand. When added to the

state’s $47.9 thousand match, a total of $479 thousand is available to for this program.

DVR reports this is the second stage in an effort to acquire the federal amount available to the

state. In cooperation with the Governor’s staff, DVR was able to identify $47 thousand in agency

savings that were used to apply for and obtain a grant that generated $431,100 in federal monies.

If SB406 is enacted, the grand total available for this program will be $958 thousand that will be

placed in a permanent revolving fund to be used to guarantee loans for small businesses operated

by the disabled and for the purchase of equipment so persons with disabilities can work from re-

mote locations.

Loans for the purchase of equipment are obtained from lending institutions and funds in this pro-

gram are used to guarantee the loans. DVR would enter into an agreement with a lending institu-

tion to handle the loans after a request for proposal process to select the best rates and terms for

small businesses. DVR reports high payback rates in comparable loan guarantee programs for

persons with disabilities, and staff expresses great confidence that loan defaults will be minimal.

The federal regulations allow interest to be earned on the account and the fund would only be

depleted if the loans were in default.

DVR states that this is a one time offer from the federal government that will expire on 9-05-05

and emphasizes that there is no recurring cost to the general fund.

PERFORMANCE IMPLICATIONS

The ability of DVR to assist persons with disabilities will be enhanced while maximizing the use

of general fund dollars by utilizing a nine-to-one federal match.

FISCAL IMPLICATIONS

The appropriation of $47.9 thousand contained in this bill is a non-recurring expense to the gen-

eral fund. Any unexpended or unencumbered balance remaining at the end of FY06 will revert to

the general fund.

ADMINISTRATIVE IMPLICATIONS

DVR indicates it can administer the program with existing staff.

TECHNICAL ISSUES

The appropriation in this bill is designed to generate revenue for a revolving fund that is to oper-

ate more than one year. According to DVR, the FY06 reversion clause poses no problem be-

cause the appropriation will be encumbered once it is placed in the revolving fund account.

Senate Bill 406 -- Page 3

OTHER SUBSTANTIVE ISSUES

The three agencies analyzing the bill report the following:

•

Technology often is a determining factor for many people with disabilities in terms of

their ability to perform work.

•

Reasonable accommodations for persons with disabilities are often not addressed by em-

ployers. The fact that individuals with a disability can provide their own reasonable ac-

commodation is a positive factor in becoming employed.

•

Persons with disabilities often find that working from a remote location is satisfactory to

the employer as well as allowing the individual with the disability to work at a location at

is physically accessible

•

Technology is often very expensive. The ability to loan equipment to determine the types

of equipment best fits the individual’s needs without having to incur expenses on tech-

nology which may not work for the individual is a cost saving practice for the individual

with the disability

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

Guaranteed loans for the purchase of equipment to be used by persons with disabilities will be

limited by the availability of the $470 thousand generated by the agency’s first application for

the federal matching funds available to the state.

RS/yr