Date Requested:January 12, 2012
Time Requested:06:01 PM
Agency: Higher Education Policy Commission
CBD Number: Version: Bill Number: Resolution Number:
2012R1133 Introduced SB80
CBD Subject: STATE MEDICAL AND OSTEOPATHIC STUDENTS
FUND(S)
0589
Sources of Revenue
General Fund
Legislation creates:
A New Program

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

     Revised
    
    The purpose of this bill is to create a tuition waiver program allowing out-of-state medical students who commit to practice in an underserved area of West Virginia for a specified period of time allowing the payment of in-state tuition. The bill sets forth the conditions for approval in the program. The bill provides for repayment of the tuition waiver if the student does not practice in the underserved area. The bill also grants rule making authority. The first year annual cost is expected to be $5.2 million and increase to $6 million upon full implementation.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2012
Increase/Decrease
(use"-")
2013
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 5,208,550 5,980,498
Personal Services 0 0 0
Current Expenses 0 10,000 10,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 5,198,550 5,970,498
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    The non-resident fee differential for medical students is currently $26,790, $26,610, and $30,000 per year at Marshall University (MU), West Virginia University Health Sciences (WVUHS) and the West Virginia School of Osteopathic Medicine (WVSOM), respectively. Both WVUHS and WVSOM anticipate that 20 students will participate and WVUHS expects about 25 students to receive the waiver. If the expected number of students participate, the annual cost in terms of lost tuition and fees will start at $7,207,800. The cost will change as students who do not meet the legislation’s requirements make repayments and tuition rates increase. Upon full implementation, it is anticipated that approximately 50 percent of the students at MU and WVUHS will not meet the legislation’s requirements and be required to make repayments. About 20 percent of the WVSOM students are expected to make repayments. It is anticipated that tuition and fees for out-of-state students would increase about 5% per year.
    
     Participating students would not need to make repayments unless they entered a nonqualified practice site upon completion of their residency program. Because all non-resident students would be eligible, it is expected that the recipients would be evenly distributed among the student levels. Inflationary costs would continue to rise after full implementation.
    
    
    From a budgetary standpoint if the program operates as a true “waiver” and the tuition loss is not replaced, the loss of $5.2 million to $6 million per year would be very detrimental to the school’s’ operating budgets. The out-of state tuition and fee revenues fund expanding operational and capital needs. It would be difficult to meet accreditation requirements if revenues were severely curtailed. The financial risk for institutions would be reduced if the number of waivers was restricted.
    The tracking of students’ residency statuses and the administration of repayments would require the services of a contractor. It is anticipated that this cost would be about $10,000 per year. It is expected that uncollectible loan expenses would be offset by interest charges.
    If this program is approved it will also be critical to set the interest rates and penalties for non-compliance at a high enough level to discourage the non-residents from simply using this as another loan financing program with little real intent to fulfill the service commitment. Similar programs use repayment rates of 15 percent. If that were to happen, the participation rate and cost could escalate quickly.
    


Memorandum
Person submitting Fiscal Note:
Ed Magee
Email Address:
emagee@hepc.wvnet.edu