The fiscal implications of SB 502 indicate a negative financial impact on the state's General Revenue funds, totaling approximately $3.58 million over the biennium ending August 31, 2027. This cost primarily arises from the reclassification of 37 positions within the Health and Human Services Commission’s (HHSC) Office of Inspector General (OIG) to Schedule C of the state’s classification salary schedule, which includes higher pay scales and additional benefits. The bill does not appropriate funds directly but establishes a legal framework for future appropriations.

For fiscal year 2026, the bill is expected to cost the state $2.06 million, followed by $1.52 million annually from 2027 through 2030. The increased salary and benefits account for $1.69 million per year in all funds, with a portion funded through General Revenue, Medicaid match funds, and federal funding sources. Additionally, a one-time technology upgrade cost of $612,419 is projected in 2026 for modifications to the Centralized Accounting and Payroll/Personnel System (CAPPS) to accommodate the classification changes.

While the bill introduces recurring costs, no significant fiscal impact is anticipated for local governments. The funding requirements primarily affect state-level appropriations, and the shift to Schedule C pay classification ensures parity with other law enforcement agencies in Texas. The legislature may need to adjust budget allocations to cover these expenses, particularly as they relate to law enforcement salaries and operational expenses within HHSC’s OIG.

SB 502 provides necessary and justified enhancements to the role and compensation of peace officers employed by the Health and Human Services Commission’s (HHSC) Office of Inspector General (OIG). These officers play a crucial role in investigating fraud, abuse, and exploitation within state health programs, as well as collaborating with other law enforcement agencies to enforce laws related to Medicaid fraud and misuse of state resources.

The bill ensures that OIG peace officers receive fair and competitive compensation by aligning their salaries with Schedule C of the state’s classification salary schedule, similar to other state law enforcement agencies. Currently, these officers earn 42% less than their counterparts, despite having an average of 27 years of experience and holding advanced certifications. By addressing this disparity, SB 502 will improve recruitment and retention of experienced personnel, strengthening the enforcement of critical healthcare regulations.

Additionally, the bill includes a technical amendment to formally recognize HHSC OIG officers in Article 2A.001 of the Texas Code of Criminal Procedure. This change does not expand their authority beyond existing responsibilities but clarifies their standing as official peace officers in the state. The fiscal impact, estimated at $3.58 million over the next biennium, is a necessary investment in ensuring the effectiveness of OIG investigations and maintaining the integrity of state health programs.

Given its focus on equity in compensation, enhanced enforcement capabilities, and the continued protection of public resources, Texas Policy Research recommends a YES vote on SB 502.

• HB 4419 (Same As)