LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session May 4, 1995 TO: Honorable Irma Rangel, Chair IN RE: Committee Substitute Committee on Higher Education for House of Representatives HouseBill No. Austin, Texas 1592 FROM: John Keel, Director In response to your request for a Fiscal Note on House Bill No. 1592 (Relating to the establishment of the University Bonds for the Education of Texans program; authorizing the issuance of special savings certificates) this office has determined the following: The bill would establish the University Bonds for the Education of Texans program through which the state treasurer would be authorized to issue special savings certificates (bonds) for use in paying college tuition and fees. The program would allow a parent or guardian of a child 18 years or younger to establish an education savings account within the treasury through the purchase of bonds. Such accounts would accrue interest monthly. When a child with such an account reaches the age of 18 and enrolls in an institution of higher education, the registrar of the institution would credit the face amount of the bond and interest accrued against any payment for tuition and fees required of the student. The state treasurer would reimburse institutions for the face amount of bonds and accrued interest in accordance with rules established by the treasurer. For students choosing to attend private or out-of-state institutions, the state treasurer, upon presentation of a bond by the person whose name appears on the bond, would pay the person the face amount of the bond and accrued interest. In addition, for persons with bonds issued on their behalf, upon reaching the age of 18 and presentation of a bond bearing their name, the state treasurer would pay the face amount of the bond and interest accrued. The bill would also direct the state treasurer to establish a program to provide economically disadvantaged youths with scholarships to institutions of higher education. Under the scholarship program, the treasurer would encourage persons to contribute to the purchase of bonds for the benefit of economically disadvantaged youths. The treasurer would hold bonds purchased under the program and redeem them at the institution of higher education in which the scholarship recipient enrolled. The bill would direct the state treasurer to report annually the status of the program to the Governor, Lieutenant Governor, and Speaker of the House. Savings bonds issued under the authority of the bill would not represent indebtedness of the State and the program would be administered by the treasurer in such a manner as to be self- supporting. No fiscal implication to the State or units of local government is anticipated. Source: LBB Staff: JK, MK, WRR