BILL ANALYSIS Ó AB 589 Page 1 ASSEMBLY THIRD READING AB 589 (Perea) As Amended May 27, 2011 Majority vote BUSINESS & PROFESSIONS 6-3 APPROPRIATIONS 12-5 ----------------------------------------------------------------- |Ayes:|Hayashi, Allen, Butler, |Ayes:|Fuentes, Blumenfield, | | |Eng, Hill, Ma | |Bradford, Charles | | | | |Calderon, Campos, Davis, | | | | |Gatto, Hall, Hill, Lara, | | | | |Mitchell, Solorio | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Bill Berryhill, Hagman, |Nays:|Harkey, Donnelly, | | |Smyth | |Nielsen, Norby, Wagner | | | | | | ----------------------------------------------------------------- SUMMARY : Establishes the Steven M. Thompson Medical School Scholarship Program (Program) to promote the education of medical doctors and doctors of osteopathy, as specified. Specifically, this bill : 1)Establishes the Program within the Health Professions Education Foundation (Foundation). 2)States intent that the Foundation and the Office of Statewide Health Planning and Development (Office) provide the ongoing program management for the Program. 3)Specifies that the Program be used only for the purpose of promoting the education of medical doctors and doctors of osteopathy and related administrative costs. 4)Requires Program participants to commit prior to entering an accredited medical or osteopathic school in writing to three years of full-time professional practice once the participant has achieved full licensure, and after completing an accredited residency program, in direct patient care, in an eligible practice setting, as specified. 5)Provides that the maximum allowable amount per total AB 589 Page 2 scholarship is $105,000, distributed over the course of a standard medical school curriculum, increasing to ensure that at least 45% of the total scholarship award is distributed upon matriculation in the final year of school. 6)Authorizes the Office to recover the funds awarded plus the maximum allowable interest in the event the Program participant does not complete the minimum three years of professional service pursuant to his or her contractual agreement with the Foundation. 7)Establishes certain criteria for selecting scholarship recipients, as specified. 8)Establishes the Steven M. Thompson Medical School Scholarship Account (Scholarship Account) within the Health Professions Education Fund (Education Fund), for the purpose of receiving federal or private funds. 9)Provides that funds in the Scholarship Account be used to fund scholarships pursuant to agreements made with recipients and as follows: a) Scholarships shall not exceed $105,000 per recipient; and, b) Scholarships shall not exceed the amount of the educational expenses incurred by the recipient. 10)Provides that funds placed in the Scholarship Account be used for the implementation of this bill upon appropriation by the Legislature. 11)Specifies that the Scholarship Account be used to pay for the cost of administering the Program, not exceeding 5% of the total appropriation for the Program. 12)Requires the Office and Foundation to manage the Scholarship Account established by this bill, prudently in accordance with other provisions of law. 13)Provides that this bill be implemented only to the extent that the Scholarship Account contains sufficient funds as determined by the Foundation. AB 589 Page 3 EXISTING LAW : 1)Establishes the Medically Underserved Account for Physicians within the Education Fund, managed by the Foundation and the Office, with the primary purpose of funding the Steven M. Thompson Physician Corps Loan Repayment Program (Loan Repayment Program). 2)Provides up to $105,000 for the repayment of prescribed educational loans obtained by a physician and surgeon who practices in a medically underserved area (MUA) of the state, under the Loan Repayment Program. FISCAL EFFECT : According to the Assembly Appropriations Committee, negligible direct state impact. COMMENTS : According to the author, "This bill seeks to address shortages of physician services, particularly primary care physician services, that exist in over 200 distinct regions of California identified as MUAs. This bill also aims to make medical school more financially accessible for those students willing to pursue careers in primary care and practice medicine in MUAs. This bill is necessary to address the growing geographical disparity of physician supply in California, as well as the rapidly increasing cost of a medical education, which is increasingly a barrier to entry for students from economically disadvantaged backgrounds." California's population is growing rapidly and aging, increasing a greater demand for physicians than ever before. It is also becoming more culturally and ethnically diverse, and many areas that have traditionally been medically underserved are expected to see the greatest population growth. At the same time, many of California's physicians are approaching retirement themselves, and the pipeline designed to replace them is experiencing key bottlenecks in both medical school and residency training. Medical school debt is also growing faster than physician income, and is one of the primary reasons the supply of primary care physicians is lagging even further behind that of specialists. The Foundation offers the Loan Repayment Program to encourage physicians to practice in MUAs of California by authorizing a AB 589 Page 4 plan for repayment of their educational loans. Physicians may receive up to $105,000 in exchange for their service in a designated MUA area for a minimum of three years. Loan repayment recipients are required to sign a written contract with the Foundation outlining the provisions which must be met in order to fulfill the obligations under this program. Failure to comply with the terms of the contract may result in the awardee's repayment of funds plus interest. The Loan Repayment Program is funded by voluntary contributions made as part of physician licensure fees and other voluntary sources. The Program established under this bill would similarly be funded by voluntary federal or private sources. Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916) 319-3301 FN: 0001124