(a) The board shall administer the Rural Resident Physician Grant Program as a competitive grant program to encourage the creation of new graduate medical education positions in rural and nonmetropolitan areas, with particular emphasis on the creation of rural training tracks. The board shall award grants to new or expanded physician residency programs at teaching hospitals and other appropriate health care entities according to the program criteria established under this section.
(b) The board shall establish criteria for the grant program in consultation with one or more physicians, including a physician who practices in a rural area of this state, teaching hospitals, medical schools, and independent physician residency programs, and with other persons considered appropriate by the board. The program criteria must take into account whether a rural or nonmetropolitan area has the resources sufficient to support a physician residency program in a manner that would satisfy applicable residency program accreditation requirements.

(c) The board may provide grants only to support a physician residency program:
(1) that provides the level of medical care that is most needed in a rural or nonmetropolitan area; and
(2) until the program becomes eligible for federal grant funding.
(d) Grant funds awarded under this section may be used only to pay direct costs associated with creating or maintaining a residency position, including the salary of the resident physician.
(e) Each grant application must:
(1) specify the number of residency positions expected to be created or maintained with the grant money;
(2) specify the grant amount requested for each year;
(3) include documentation of infrastructure and staffing to satisfy applicable residency program accreditation requirements;
(4) include documentation that the residency program will set a primary goal of producing physicians who are prepared for practice in a rural area; and
(5) include evidence of support for residency training by sponsoring institutions and the community.
(f) The board shall award grants for all residency positions awarded a grant under this section in the preceding year before awarding a grant for a residency position that did not receive a grant in the preceding year, provided that the applicable grant recipient from the preceding year complies with all conditions of the grant as described by Subsection (g) and satisfies the grant eligibility requirements.
(g) The board shall monitor physician residency programs receiving grants as necessary to ensure compliance with the grant program and shall require the return of any unused grant money by, or shall decline to award additional grants to, a residency program that receives a grant but fails to:
(1) create and fill, within a reasonable period, the number of residency positions proposed in the program’s grant application; or
(2) satisfy any other conditions of the grant imposed by the board.
(h) The board shall use money forfeited under Subsection (g) to award grants to other eligible applicants. With respect to the physician residency program forfeiting the grant, the board may restore grant money or award additional grants, as applicable, to the program as soon as practicable after the program satisfies all conditions of the grant.
(i) The board shall adopt rules for the administration of the grant program. The rules must include:
(1) administrative provisions governing:
(A) eligibility criteria for grant applicants;
(B) grant application procedures;
(C) guidelines relating to grant amounts;
(D) guidelines relating to the number of grants to be awarded each year, subject to available funds;
(E) procedures for evaluating grant applications;
(F) procedures for monitoring the use of grants; and
(G) reporting requirements for grant recipients;
(2) methods for tracking the effectiveness of grants; and
(3) any conditions relating to the receipt and use of a grant as considered appropriate by the board.