BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair AB 589 (Perea) Hearing Date: 8/15/2011 Amended: 7/12/2011 Consultant: Katie Johnson Policy Vote: Health 9-0 _________________________________________________________________ ____ BILL SUMMARY: AB 589 would establish the Steven M. Thompson Medical School Scholarship Program. The program would award up to $105,000 per awardee to eligible medical or osteopathic school students over the course of their medical school curricula. The awardee would agree to practice for three years in either a clinic or a medical practice located in a medically underserved area. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund Scholarships and at least $1,000 annually Federal/* program administration Private *See Staff Comments _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense File. This bill would establish the Steven M. Thompson Medical School Scholarship Program (Program) within the Health Professions Education Foundation (Foundation). A selection committee would be required to develop awardee selection guidelines that meet specified criteria: 1) provide priority consideration to applicants who would be best suited to meet the cultural and linguistic needs and demands of patients from a medically underserved area, 2) give preference to applicants who have committed to practicing in family practice, internal medicine, pediatrics, or obstetrics/gynecology, 3) give preference to applicants who would serve in a super-medically underserved area, and 4) include a factor ensuring geographic AB 589 (Perea) Page 1 distribution of placements. Scholarship recipients would be required to be students who agree in writing, prior to entering an accredited medical or osteopathic school, to serve for at least three years in either a clinic or a medical practice located in a medically underserved area, as specified. The maximum award would be $105,000 and would be distributed over the course of a standard medical school curriculum. This bill would provide that in the event that an awardee does not complete the minimum of three years of service, the Program would recover the funds awarded and any related interest. This bill would create the Steven M. Thompson Medical School Scholarship Account (Account) within the Health Professions Education Fund for the purposes of receiving federal or private funds. Monies in the account would be used for only the following, upon appropriation by the Legislature: 1) scholarships, 2) program administrative expenses, not to exceed 5 percent of the total appropriation for the program. This bill would provide that the Program would only be implemented to the extent that the Account contains sufficient funds as determined by the Foundation. Funds in the Health Professions Education Fund are continuously appropriated; it is unclear whether or not the monies in the Account would be continuously appropriated or would need to be appropriated by the Legislature, as this bill suggests. Staff recommends that this bill be amended to establish the Account within the State Treasury and that monies contained in the Account be made available upon appropriation by the Legislature. Fiscal Impact In order to establish regulations and guidelines and to administer such a Program, the Foundation would need at least half a personnel year, approximately $50,000 annually. Since administrative funds are limited to 5 percent of the total Program appropriation, the Program would require an account balance of at least $1,000,000 annually. Although this bill would specify that monies in the Account would consist of federal and private funds, no specific funding sources have been identified. Thus, there would be General Fund cost pressure to fund this program if federal and private monies do not materialize. Program costs could increase depending on the number of scholarships it chose to award. AB 589 (Perea) Page 2