LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session April 10, 1995 TO: Honorable Irma Rangel, Chair IN RE: Committee Substitute Committee on Higher Education for House of Representatives HouseBill No. Austin, Texas 2467 FROM: John Keel, Director In response to your request for a Fiscal Note on House Bill No. 2467 (Relating to tuition rates at public institutions of higher education) this office has determined the following: The bill would increase law school tuition from $60 per hour for Texas resident students and $150 per hour for nonresident students to $75 and $200 respectively. The bill would allow institutions offering optometry programs to charge a tuition rate up to three times the statutory undergraduate tuition rate. It would allow institutions to raise undergraduate pharmacy tuition to twice the amount of general undergraduate tuition. Beginning in fiscal year 1997, the bill would increase the undergraduate tuition rate of $32 per hour at all public institutions by $2 per hour, increasing $2 per year until fiscal year 2001 when tuition would reach $40 per hour. While current policy is to supplant general revenue appropriations with increased tuition revenue, the bill would provide that increased undergraduate tuition revenue shall not be used to reduce general revenue appropriations to institutions. Finally, the bill would raise the competitive academic scholarship amount needed to qualify for a waiver of nonresident tuition from the current $200 per year to $1000 per year. It is estimated that the law school tuition increase would generate $2.1 million per year in savings to general revenue. Undergraduate, pharmacy, and optometry tuition increases are estimated to grow from $2.5 million in FY1996 to $66.4 million in FY2001 if enrollments continue as projected. The increase in tuition revenue would be retained by the institutions with no subsequent reduction in general revenue appropriations. The change to scholarship nonresident tuition waivers is estimated to cause 1,800 students to drop out of school for a savings to the state of approximately $7 million per year in formula funding and for 450 to continue to enroll paying full nonresident tuition. Estimates of savings to general revenue include the impact of law school tuition increases, formula funding savings, and increased tuition paid by students who lose the nonresident tuition waiver. Estimates of gain to local funds include undergraduate, pharmacy, and optometry tuition increases which would be retained by the institutions. The probable fiscal implication of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Fiscal Probable Savings Probable Gain to Year to General Institutions' Revenue Fund 001 Local Funds 1996 $9,600,000 $2,500,000 1997 9,600,000 2,700,000 1998 9,600,000 18,300,000 1999 9,600,000 34,200,000 2000 9,600,000 50,100,000 2001 9,600,000 66,400,000 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. No fiscal implication to units of local government is anticipated. Source: Higher Education Coordinating Board LBB Staff: JK, MK, WRR