OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

HB-6915

AN ACT CONCERNING A STUDENT LOAN BILL OF RIGHTS.

AMENDMENT

LCO No.: 6170

File Copy No.: 237

House Calendar No.: 168


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 16 $

FY 17 $

Banking Dept.

BF - Potential Cost

See Below

See Below

Banking Dept.

BF (Student Loan Ombudsman account) - Revenue Gain

None

$36,000 - $90,000

Note: BF=Banking Fund

Municipal Impact: None

Explanation

The amendment strikes the underlying bill and its associated fiscal impact and results in the impact described below.

The amendment creates a new student loan ombudsman position in the Banking Department, establishes the ombudsman's duties, and requires the implementation and maintenance of a student loan borrower's education course.

The amendment requires that the above be provided within available appropriations. It does not appear that this mandates that the agency perform the activity regardless of available funding, therefore the potential costs are described below.

Student Loan Ombudsman Related Costs

 

FY 16 $

FY 17 $

Ombudsman salary

91,000

95,095

Fringe Benefit Costs1

75,466

78,862

Course Development

-

25,000

Total

166,466

198,957

 

An Ombudsperson position and fringe benefits result in an estimated cost of $166,466 in FY 16 and $198,957 in FY 17. The student loan education course required in FY 17 is anticipated to cost $25,000 based on previous Department of Education curriculum development and printing costs.

The bill expands the scope of services subject to Banking Department licensure to student loan servicers in FY 17. While the number of student loan servicers subject to licensure is not known, it is expected to range from 20 to 50 student loan servicers. Banking Fund revenue from student loan servicers is estimated to range from $36,000 to $90,000 from biennial licensure ($1,000) and initial investigation ($800) fees in FY 17. It is anticipated that the department's additional licensure and enforcement responsibilities will not result in a fiscal impact.

The amendment establishes a separate nonlapsing student loan ombudsman account within the Banking Fund. Beginning in FY 17, fees from the licensure of student loan servicers will be deposited in the account and used to pay for the administration of the student loan ombudsman duties and responsibilities. The amount estimated to be deposited in FY 17 ranges from $36,000 to $90,000 as described above.

It should be noted that while the amendment establishes the ombudsman position in FY 16, the revenue from the licensing fees does not start until FY 17. Further, in FY 17 the ombudsman costs are higher than the anticipated licensing fee revenue. Therefore, in FY 16 the agency may either: 1) not hire an ombudsman until the nonlapsing student loan ombudsman account has sufficient funding, or 2) utilize existing agency Personal Services funding, if available.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation and the number of initial and renewal licenses issued.

Sources:

Core-CT Financial Accounting System

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

1 The fringe benefit costs for employees funded out of other appropriated funds are budgeted within the fringe benefit account of those funds, as opposed to the fringe benefit accounts within the Office of the State Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes for other appropriated fund employees is 82.91% of payroll in FY 16 and FY 17.