96-369 October 2020 Fiscal Notes
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A REVIEW OF THE TEXAS ECONOMY FROM THE OFFICE OF GLENN HEGAR, TEXAS COMPTROLLER OF PUBLIC ACCOUNTS OCTOBER 2020 “LOCAL FUNDS”: STATE MONEY OUTSIDE THE TREASURY 7 FISCAL NOTES STATE REVENUE WATCH 11 Uninsured Texans By Spencer Grubbs and Bruce Wright MANY MORE LOSE COVERAGE IN PANDEMIC Texans have long been proud of leading the U.S. in a The lack of health insurance keeps many from variety of ways — our state is ranked first in exports and seeking health care services and preventive care. But energy production, to name just two. One distinction, aside from the personal toll, a high uninsured rate has however, isn’t something to brag about: Texas has both economic implications for the state as well, due to the highest number and the highest percentage of factors such as increased spending by doctors, hospitals uninsured residents in the nation. and local governments for uncompensated care and According to recently released U.S. Census data, the the rising cost of health care services and insurance share of Texans without health insurance — 18.4 percent premiums. in 2019 — was twice the national average of 9.2 percent. Access to health insurance allows spending that And those numbers have risen in 2020 as the COVID-19 would have gone to health care to be spent on other pandemic continues, causing economic turmoil and things, such as consumer goods and debt reduction. massive job losses. In addition, a workforce with access to health care can help increase productivity and economic output. Texas has both the highest number IMPACT ON THE TEXAS ECONOMY A 2019 study by the Texas Alliance for Health Care and the highest percentage of (TAHC) warned that Texas’ high uninsured rate could cause long-term damage to the state’s economy. It can uninsured residents in the nation. lead to worse health among the uninsured, limiting their earning power. It affects employers by increasing CONTINUED ON PAGE 3 GLENN HEGAR, TEXAS COMPTROLLER OF PUBLIC ACCOUNTS FISCAL NOTES OCTOBER 2020 | 1 A Message from the Comptroller TEXAS COMMUNITY COLLEGES CENTRAL TEXAS REGION Texas’ economy is on the REGIONAL IMPACT EMPLOYMENT OF COMMUNITY mend, after what was almost COLLEGES’ certainly the most unexpected SPENDING, 2019 BLINN COLLEGE 5,719 recession in American history. OUTPUT But the effects of the COVID-19 CENTRAL TEXAS COLLEGE pandemic will be with us for HILL COLLEGE some time to come — and many $552.4 MILLION Texans are still out of work. MCLENNAN COMMUNITY COLLEGE COMPENSATION As I write this, the state has TEMPLE COLLEGE nearly 800,000 fewer jobs than $282.6 MILLION it did before the pandemic shut down so much of our Texas’ community college districts serve a vital role in our economy. state’s economy by developing our workforce, preparing One of the most painful effects of losing a job, students for further academic study and meeting specific moreover, is the loss of employer-sponsored insurance, vocational needs. The 20 Note: Figures include direct, indirect which offers health coverage for the majority of full-time counties in the Central Texas and induced economic impacts. Sources: JobsEQ, Texas U.S. workers. In Texas, such losses have only worsened region include five Comptroller of Public NOTE: Accounts, Texas Higher THESE ANALYSES a perennial problem in our state, which has the nation’s community college districts. Education Coordinating PREDATED THE Board and Texas COVID 19 CRISIS AND highest share of uninsured residents. By one estimate, community colleges. THE ECONOMIC IMPACTS THAT about 659,000 Texans lost health insurance coverage FOLLOWED. earlier this year. The Texas Alliance for Health Care WAGES BY EDUCATIONAL ATTAINMENT reports that Texas’ high rates of “uninsurance” cost our AVERAGE ANNUAL EARNINGS BY EDUCATIONAL ATTAINMENT, state economy hundreds of billions of dollars. CENTRAL TEXAS REGION, 2018 In this issue of Fiscal Notes, we examine the problem Community colleges $50,000 provide their students of uninsured Texans, the economic consequences for our AVERAGE OF ALL with a good return on state, the options available to those who have recently $40,000 EARNINGS investment. lost their insurance — and various policies that could extend health coverage to more of our most vulnerable $30,000 AVERAGE WAGE INCREASE OVER HIGH SCHOOL citizens. It’s a pressing issue that is only becoming more OR EQUIVALENT ASSOCIATE ASSOCIATE $3,773 urgent, day by day. $20,000 NUMBER OF WORKERS, SOME COLLEGE OR EQUIVALENT, We also take a look at an issue important to state OR ASSOCIATE DEGREE 117,903 finances, “local funds” — state funds held by individual $10,000 TOTAL REGIONAL ADDITIONAL WAGES agencies and institutions that contain billions of dollars, LESS THAN HIGH SCHOOL HIGH SCHOOL NO COLLEGE SOME COLLEGE OR DEGREE outside the state Treasury and generally outside the $0 $444.8 MILLION state’s budgeting and appropriations process. Source: JobsEQ In many cases, the entity holding local funds has special abilities, functions or requirements that justify CERTIFICATES AND DEGREES LIBERAL ARTS AND SCIENCES, GENERAL STUDIES AND HUMANITIES giving it a higher level of control over its funding. In TOP CERTIFICATES AND DEGREES, HEALTH PROFESSIONS AND RELATED CLINICAL SCIENCES other cases, however, the revenue in local funds is CENTRAL TEXAS BUSINESS, MANAGEMENT, MARKETING used simply to support daily operations, in just the way REGION, AND RELATED SUPPORT SERVICES 2017 2018 SECURITY AND PROTECTIVE SERVICES appropriated revenue is used, with little justification SCHOOL YEAR MECHANIC AND REPAIR for treating it differently. Until recently, there was Source: JobsEQ TECHNOLOGIES/TECHNICIANS surprisingly little information available on these funds; a 0 1,000 2,000 3,000 4,000 2019 report from the Legislative Budget Board gives us SUMMARY our first major look at their status and uses. The Central Texas region’s five community college districts I hope you find this issue informative and address local skills gaps and meet the specific needs of area enlightening. employers. They support more than 5,700 jobs and add more than $550 million in economic output annually. The higher pay of those with some college or an associate degree helps raise total wages in the region nearly $445 million per year. TO SEE INFORMATION ON COMMUNITY COLLEGES AND THE TEXAS ECONOMY: https://comptroller.texas.gov/economy/economic-data/colleges/ GLENN HEGAR If you would like to receive paper copies of Fiscal Notes, contact us at Texas Comptroller of Public Accounts [email protected] 2 | GLENN HEGAR, TEXAS COMPTROLLER OF PUBLIC ACCOUNTS Uninsured Texans CONTINUED FROM PAGE 1 An estimated 21.9 million American workers lost their jobs or otherwise left employment between February and May 2020. absenteeism and sidelining skilled workers — and has a negative impact on communities that become saddled with rising costs for uncompensated health care. The TAHC study predicted that the number of uninsured Texans could rise to 6.1 million by 2040. Without a change in policy, the study projects that costs for hospitals and physicians who provide unsubsidized coverage between February and May 2020. In Texas, the and uncompensated care will rise from $3.5 billion in organization estimates that 659,000 adults lost health 2016 to $12.4 billion in 2040, while the impact of lost insurance coverage in the same period, marking a earnings and poor health will rise from $57 billion in 15 percent increase from the number of uninsured 2016 to $178.5 billion in 2040. adults in 2018. Among states, Texas ranked second — slightly below first-ranked California (689,000) — in its PANDEMIC EFFECTS number of persons recently uninsured due to job loss Texas, along with the rest of the nation, has experienced (Exhibit 1). an unprecedented number of job losses in a short time The Kaiser Family Foundation (KFF), a nonprofit due to the COVID-19 pandemic — the direct result of focused on national health issues, projected even businesses reducing or closing operations to adhere to greater impacts of COVID-19 on uninsured rates. social distancing requirements. For many, however, the KFF estimated that 27 million Americans and loss of a job brings about an additional hardship: the loss 1.6 million Texans could lose coverage after losing of health insurance coverage. In the U.S., the largest source of health coverage EXHIBIT 1 is insurance provided by employers, also known as employer-sponsored insurance (ESI). According to ESTIMATED NUMBER OF UNINSURED DUE TO JOB LOSS, the Urban Institute, in both Texas and the U.S., about 10 MOST POPULOUS STATES AND U.S., FEBRUARY - MAY 2020 80 percent of full-time employees were eligible for ESI from their own employers in 2018. The share, CALIFORNIA however, was much smaller for those working for TEXAS small businesses (fewer than 50 employees), at 46.9 percent in Texas and 51.2 percent nationally. FLORIDA But the COVID-19 pandemic is disrupting the NEW YORK link between employment and health insurance NORTH CAROLINA coverage, and may exacerbate Texas’ already high MICHIGAN uninsured rate. FamiliesUSA, a nonpartisan health care advocacy ILLINOIS group, has used data from the U.S. Bureau of Labor GEORGIA Statistics to estimate that 21.9 million American MASSACHUSETTS U.S. TOTAL 5,367,000 workers lost their jobs or otherwise left employment OHIO between February and May 2020. The increase in unemployment during this three-month period 0 200,000 400,000 600,000 was significantly higher than any annual increase Notes: Estimates are from May 2020 and may change depending on new employment, the future ever recorded nationwide, including the 3.9 million impacts of COVID-19 and any federal legislation adopted to address those impacts. Uninsured increase recorded between 2008 and 2009, during the estimates do not take into account unemployed workers who retained coverage through a spousal employer, Medicaid or the individual insurance market or family members of the recently unemployed Great Recession.