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F I S C A L I M P A C T R E P O R T

SPONSOR Ortiz y Pino

ORIGINAL DATE

LAST UPDATED

2-24-2007

HB

SHORT TITLE Social Worker Loan for Service Act

SB 1114

ANALYST Dearing

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

*NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Higher Education Department (HED)

Department of Health (DOH)

SUMMARY

Synopsis of Bill

Senate Bill 1114 enacts the Social Worker Loan for Service Act. Senate Bill 1114 creates the

Social Worker Loan for Service fund, establishes a framework for social worker’ loans for

services to be provided to the underserved areas in the state of New Mexico, mandates annual

reporting of the program’s status to the Executive and Legislature, and provides penalties for

service loans in default.

FISCAL IMPLICATIONS

Senate Bill 1114 carries no appropriation.

This bill creates a new fund and provides for continuing appropriations. The LFC has concerns

with including continuing appropriation language in the statutory provisions for newly created

funds, as earmarking reduces the ability of the legislature to establish spending priorities.

Senate Bill 1114 – Page

2

SIGNIFICANT ISSUES

The Health Professional Loan Repayment Act, Section 21-22D-2 provides repayment of

education debt for many other types of health care providers including primary care physicians,

optometrists, podiatrists, physician's assistants, dentists, and nurses.

The significant difference between the existing Repayment Act and this proposed Loan for

Service Act is that students participating in the existing program are provided repayment for

service after the debt is incurred. Under the Loan program, upon certification and entry into a

social worker education program, principle and accrued interest of loans taken out to fund

participating students’ education are incrementally retired or repaid with successive years of

service. The interest on Loan for Service loans accrues at 7 percent while in the social worker

preparation program and 18 percent if in non-compliance with the terms and (contract) default

occurs. Only New Mexico residents entering an approved program can receive loans. Students

can attend any accredited social work education program located in-state and receive a program

loan for the service provided they identify their intentions to serve underserved area.

The proposed legislation would provide loan repayment for service. In the event that a

participant fails to comply with the terms of the agreement including a failure to select an

underserved area, a maximum penalty of up to 3 times the principle plus 18 percent interest

could be assessed.

Senate Bill 1114 as written would make it easier to retain social workers from New Mexico

postsecondary institutions, as well as positioning them in underserved rural areas.

Other loan or repayments for service programs include the following programs.

Medical Student Loans, 21-22-1 through 21-22-10

Osteopathic Medical Student Loans, 21-22A-1 through 21-22A-10

Nursing Student Loans, 21-22B-1 through 21-22B-10

Allied Health Student Loan for Service, 21-22C-1 through 21-22C-10

Health Professional Loan Repayment, 21-22D-1 through 21-22D-10

Public Service Law Loan for Service Act, 21-22F-1 through 21-22F-11

The Higher Education department administers this Allied Health Loan-for-Service Program,

which provides loans to students in the following fields of study:

• Physical Therapy

• Respiratory Care

• Occupational Therapy

• Laboratory Technology

• Speech Language Pathology

• Mental Health Services

• Audiology

• Emergency Medical Services

• Pharmacy

• Nutrition

The Social Work program is currently considered to fall under Mental Health Services; however,

Senate Bill 1114 – Page

3

in 2006 no Social Work students applied for the loan-for-service. A total of 12 loans were made,

totaling $108,000. Half of the loans were made to Pharmacy students, as they constituted a

majority of those that applied. The average award was $10,000 per student.

If the program were promoted to Social Work students, it is likely they could benefit from the

program.

While the terms of these existing programs vary, the Nursing Student program has penalties and

contract terms similar to the proposed program. If enacted, the legislation could promote an

increased number of social worker practicing in the state, and allows them to be directed to

where they are most needed.

PERFORMANCE IMPLICATIONS

The department will make annual reports to the governor and to the legislature regarding loans

amounts, current information on participants, and the status of participants in practice having

graduated from their programs.

PD/nt