BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
Gloria Romero, Chair
2009-2010 Regular Session
BILL NO: AB 1703
AUTHOR: Knight
INTRODUCED: March 18, 2010
FISCAL COMM: Yes HEARING DATE: June 16, 2010
URGENCY: No CONSULTANT:Daniel Alvarez
SUBJECT : Financial Aid: State Nursing Assumption Program -
Veterans' Homes
KEY POLICY ISSUE
Should the maximum loan assumption payment for registered
nurses participating in the State Nursing Assumption Program
of Loans for Education who work in state operated veterans'
homes be increased from $20,000 to $40,000?
SUMMARY
This bill increases the maximum loan assumption payment for
registered nurses (RNs) participating in the State Nursing
Assumption Program of Loans for Education - Nurses in State
Facilities (SNAPLE-NSF) who become employed full-time in a
state-operated veterans' home from $20,000 for four-years of
service to $40,000.
The bill also expands the conditions under which a SNAPLE-NSF
participant may receive a one-year extension in which to
complete their required four years of consecutive service to
include deployment for active military duty.
BACKGROUND
Existing law, effective January 1, 2007, established the
SNAPLE-NSF program, administered by the California Student
Aid Commission (CSAC). This program is intended to encourage
registered nurses and students who will become registered
nurses to seek employment in state-operated 24-hour
facilities (e.g. prisons, psychiatric hospitals, and
veterans' homes) that have a registered nurse vacancy rate of
greater than 10 percent. It will pay up to a total of $20,000
in outstanding student loans ($5,000 per year for up to four
consecutive years) for full-time employment as a registered
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nurse in an eligible state-operated facility. Applicants may
be students in an approved pre-licensure nursing program or
may have completed a program within the award year.
(Education Code 70120)
ANALYSIS
This bill :
1) Increases from $5,000 per year to $10,000 per year for
up to four years the maximum amount of loan payment that
may be assumed for clinical registered nurses
participating in the SNAPLE-NSF program who are employed
full-time in a state operated veterans' home.
2) Expands the reasons under which a SNAPLE-NSF participant
may be granted a one-year extension in which to complete
the required four years of consecutive employment to
include active military duty.
STAFF COMMENTS
1) Need for the bill : According to the author's office,
veterans' homes have been especially challenged in
meeting the needs of their patients. It is hoped that
by increasing the loan assumption limit the program will
attract far more participants, meaning more qualified
nurses in veterans' homes.
2) Current Program Status . Information from the California
Student Aid Commission (CSAC) indicates that:
There are currently 20 state operated
facilities that qualify to participate in
SNAPLE-NSF because they have vacancy rates greater
than 10 percent. Of these, only one is a veterans'
home (14 are correctional institutions and the rest
are developmental centers, diagnostic centers or
state psychiatric hospitals). The remaining four
veterans' homes have RN vacancy rates of less than
10 percent and, therefore, are not eligible work
sites for participants.
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Since January 2007, 240 loan assumption
agreements have been made available. For these,
there have been a total of 13 applicants and 12
selected participants. Of the 12, two are
currently employed (neither at a veterans' home).
Loan assumption payments may not exceed the
participant's student debt. It is relatively rare
for a student's debt to reach $40,000 ($44,000 is
the largest debt of current participants).
1) Legislative Analyst's (LAO) Report due in less than a
year . It is not clear why overall participation in this
program is relatively low. Could it be because the
program is relatively new, not well known or perhaps
because nursing students carry less debt? Could it be
for internal structural reasons? For example, the
Yountville Veterans' Home website indicates than RN
applicants must have permanent state service status or
be working in a class eligible for a lateral transfer, a
potential hurdle for a newly licensed nurse. Whatever
the reason(s), current law (EC 70127) requires the LAO
to submit a report to the Legislature on the efficacy of
this program by May 1, 2011. Wouldn't it make more
sense to wait for the LAO's report and recommendations
before changing the structure of this program to address
a potential problem for which we don't know the cause?
2) Do loan assumption programs change behavior ? There is
very little literature to indicate that loan assumption
programs actually change a participant's behavior. In
fact, there is substantial concern that such programs
may only be providing financial incentives to
individuals who would have undertaken the same action
even without the incentive. Does it make sense to
increase the financial incentive for this program
without knowing if, in fact, it will change a person's
behavior?
3) Should there be differential loan assumption amounts ?
SNAPLE-NSF was established to try and attract RNs to any
of the state's 24-hour facilities with substantial
vacancy rates (defined as exceeding 10% for purposes of
this program). This bill will have the effect of making
employment under this program at a veterans' home
potentially twice as lucrative as employment at any
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other participating state facility, even ones with
greater RN vacancy rates. Does it make sense to provide
double the incentive ($40,000) to an RN who works at the
Yountville veterans' home which has a 20% vacancy rate,
than to an RN who would work at the Salinas Valley
psychiatric program which has a 21% RN vacancy rate or
the Ventura Youth Correctional Facility which has a 26%
vacancy rate?
4) 2007 Budget included Funding for Pay Increases in
Veterans' Homes . The 2007 Budget included $1.5 million
for pay increases for various health care positions
within Veteran Affairs Homes, including registered
nurses. The pay increases were to provide greater
parity between positions in Veterans Affairs and their
counterparts within the Department of Corrections and
Rehabilitation and the private sector, and better enable
Veterans Affairs to recruit and retain medical and
health care personnel.
5) Why $40,000 ? This bill increases the maximum loan
assumption under the SNAPLE-NSF program from $20,000 to
$40,000 for selected participants. Why $40,000?
6) Amend bill to allow CSAC to offer extensions of greater
than one-year . The bill proposes to add "active
military duty" as a circumstance under which
participants who are unable to complete one of their
four consecutive years of nursing employment are
required to be granted a one-year extension. This would
be consistent with several other CSAC-administered loan
assumption programs (e.g.: SNAPLE - nursing faculty EC
70104 (b); California Physician Assistant Loan
Assumption Program EC 69667 (b)(2); and APLE -
Assumption Program of Loans for Education (APLE)
EC 69613.6). Under current law [EC 70124
(b)], participants in SNAPLE-NSF may be granted an
extension only for one of the following three reasons:
(a) serious illness, (b) pregnancy or (c) other natural
causes.
In addition, in other loan assumption programs current law
also allows CSAC, at its discretion, to extend a
deferral for longer than the one-year period.
Accordingly, staff recommends amending the bill to make
it consistent with the other loan assumption programs to
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also allow CSAC to extend a deferral for longer than the
one-year period.
7) Nursing shortage . This program was established as part
of comprehensive legislation (SB 1309, Scott; Ch 837,
Statutes of 2006) which addressed many aspects of the
overall nursing shortage. At the time, it was not
uncommon for hospitals to offer "signing bonuses" of
$20,000 - $25,000 and the SNAPLE-NSF program was
established, in part, to compete with such signing
bonuses. However, currently, the demand for nurses has
declined (primarily due to the poor economy: nurses are
delaying retirement and/or working more shifts) and it
is rare that a recruitment bonus is offered. A recent
RN opening in Sacramento, for example, had over 600
applicants for a single position.
8) General Fund Pressure Increases in Future Years . The
fiscal implications of increasing the funding level of
loan assumption warrants is not immediate, but rather in
future years because actual costs are delayed while the
participant begins to complete their employment
requirements.
The Assembly Appropriations Committee indicated that
"assuming the availability of higher loan assumption
payments results in two additional SNAPLE-NSF
participants each year, additional general fund costs
would be $20,000 in 2011-12, increasing to $80,000 in
2014-15 and thereafter. The California Student Aid
Commission (CSAC) also indicates a need for additional
administrative resources for the SNAPLE-NSF."
SUPPORT
None received.
OPPOSITION
None received.