H.B. 1496 78(R)    BILL ANALYSIS


H.B. 1496
By: Solomons
Economic Development
Committee Report (Amended)



BACKGROUND AND PURPOSE 

Texas' unemployment insurance trust fund reached a deficit of $529.8
million at the end of fiscal 2002. The Texas Workforce Commission (TWC),
which administers the state's unemployment insurance program, plans to
impose a major tax increase on Texas employers to make up this deficit.
Although TWC has some fraud detection and overpayment collection
initiatives in place, more needs to be done to support the fund's
long-term solvency and keep employer taxes as low as possible.  HB 1496
directs the State Auditor's Office (SAO) to help TWC implement innovative
fraud detection and overpayment collection strategies and allow TWC to
contract with a private collection agency to increase overpayment
collections. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

HB 1496 amends the Labor Code to add Subchapter F, requiring the State
Auditors Office to conduct a review of benefit fraud and overpayment in
the unemployment insurance system.  The review must research fraudulent
schemes identified by other states, identify cost effective strategies to
reduce fraud, and recommend improvements to claimant job search and
placement strategies.  TWC shall implement the recommendations to the
extent possible within existing staff and budget.   

HB 1496 requires TWC, in cooperation with the SAO to develop proposed
legislation to allow TWC to contract with collection agencies to collect
overpayments of unemployment compensation benefits. 

HB 1496 requires TWC and the SAO to submit to the 79th Legislature a
report that includes the recommendations made to TWC, actions taken by TWC
in implementing those recommendations and their impact on overpayment
rates and fraud identification.    

EFFECTIVE DATE

Upon passage, or, if the Act does not receive the necessary vote, the Act
takes effect September 1, 2003. 

EXPLANATION OF AMENDMENTS

The amendment requires the SAO to consider studies of employee
misclassification resulting in underpayments to the unemployment insurance
trust fund. 

The amendment makes conforming changes.

The amendment strikes "unemployment compensation fund," replacing it with
"workforce commission federal account."