Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 Division of the Budget http://budget.kansas.gov
Adam C. Proffitt, Director Laura Kelly, Governor


April 10, 2024


The Honorable Adam Smith, Chairperson
House Committee on Taxation
300 SW 10th Avenue, Room 346-S
Topeka, Kansas 66612
Dear Representative Smith:
SUBJECT: Fiscal Note for HB 2804 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2804 is
respectfully submitted to your committee.
HB 2804 would enact the Preceptor Income Tax Incentive Act. The bill would define a
community-based faculty preceptor, or preceptor, as an individual that is licensed by the State of
Kansas as a physician or physician assistant. The bill would define preceptorship as an
uncompensated mentoring experience in which a community-based faculty preceptor provides a
program of personalized instruction, training, and supervision to a Board of Regents student. The
bill would define a student as an individual participating in a Board of Regents college or university
training program for the training of Doctor of Medicine, Doctor of Osteopathic Medicine, Master
of Science in Physician Assistant Studies, or Master of Physician Associate degrees.
The bill would provide a non-refundable income tax credit to a community-based faculty
preceptor that conducts a preceptorship for a student. For every 40 hours of precepting provided
to a student, the preceptor would be entitled to a $250 income tax credit beginning in tax year
2024. The bill would not limit the amount of tax credits a community-based faculty preceptor
could accrue based on the number of completed 40 hours the preceptor completes during the tax
year. The bill includes certification requirements for a preceptor and reporting requirements for
education institutions. A preceptor would not accrue tax credits if the preceptor or their employer
is compensated by another organization for the same preceptorship.
The Honorable Adam Smith, Chairperson
Page 2—HB 2804


Estimated State Fiscal Effect
FY 2024 FY 2025 FY 2026
Expenditures
State General Fund -- $188,368 $72,508
Fee Fund(s) -- -- --
Federal Fund -- -- --
Total Expenditures -- $188,368 $72,508
Revenues
State General Fund -- ($300,000) ($300,000)
Fee Fund(s) -- -- --
Federal Fund -- -- --
Total Revenues -- ($300,000) ($300,000)
FTE Positions -- 1.00 1.00

The Department of Revenue estimates that HB 2804 would decrease State General Fund
revenues by $300,000 in FY 2025 and in each future fiscal year. To formulate these estimates, the
Department of Revenue reviewed data from the Kansas State Board of Healing Arts that shows
there are currently 13,620 active licensed medical doctors, osteopathic doctors, and physician
assistants that may be eligible for this new tax credit. If 10.0 percent of these licensed individuals
claim tax credits for 120 hours assisting with a clinical course and one third of these tax credits are
allowed against tax liability, then this new tax credit would reduce State General Fund revenues
by approximately $300,000 each year beginning in FY 2025.
The Department indicates that the bill would require $188,368 from the State General Fund
in FY 2025 to implement the bill and to modify the automated tax system. The bill would require
the Department to hire 1.00 new Customer Service Representative FTE position to answer
questions from taxpayers. The Department estimates that ongoing expenses for salaries and wages
for the 1.00 new FTE position would total $72,508 from the State General Fund in FY 2026. The
required programming for this bill by itself would be performed by existing staff of the Department
of Revenue. In addition, if the combined effect of implementing this bill and other enacted
legislation exceeds the Department’s programming resources, or if the time for implementing the
changes is too short, additional expenditures for outside contract programmer services beyond the
Department’s current budget may be required.
The Honorable Adam Smith, Chairperson
Page 3—HB 2804


The Board of Regents indicates that the administrative costs associated with implementing
the bill would be minimal and could likely be absorbed within existing resources. Any fiscal effect
associated with HB 2804 is not reflected in The FY 2025 Governor’s Budget Report.

Sincerely,

Adam C. Proffitt
Director of the Budget


cc: Lynn Robinson, Department of Revenue
Becky Pottebaum, Board of Regents