LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          April 3, 1995



 TO:     Honorable Irma Rangel, Chair           IN RE:  House Bill No. 2747
         Committee on Higher Education                  By: Holzheauser
         House of Representatives
         Austin, Texas







FROM: John Keel, Director

In response to your request for a Fiscal Note on House Bill No.
2747 (Relating to the issuance of tuition revenue bonds for the
University of Houston-Victoria) this office has determined the
following:

The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.

The bill would authorize the University of Houston System on
behalf of the University of Houston - Victoria to issue up to $9
million of revenue bonds for the acquisition, purchase,
construction, renovation, and equipping of building facilities,
roads, land, and infrastructure.  These bonds would be payable
from pledged revenues, including student tuition.

These bonds would not be general obligations of the State;
however, the issuance of these bonds would have fiscal
implications for the State.  Although tuition income is pledged
against the bonds, historically the Legislature has appropriated
general revenue to reimburse institutions of higher education for
tuition used to pay the debt service.  It is assumed that the
Legislature would continue this policy.

It is assumed that $9 million of tax-exempt bonds would be issued
in  November 1995 with final maturity in 2016.  It is estimated
that annual debt service reimbursement costs of $870,000 would
continue for 20 years until the bonds matured.    




Furthermore, it is assumed that additional costs would be 
incurred for maintaining the additional physical facilities.  It
is estimated that the additional cost to the State would be
$218,700 each year beginning in 1998.  Currently, the University
of Houston-Victoria receives legislative appropriations for lease
of facilities.  With the issuance of these bonds, there would no
longer be the need for the lease appropriations.  This would be a
savings to the State of $793,636 per year beginning in 1998. 

The amounts shown in the table below are the net cost to the
State for the debt service on the bonds, the physical plant
operating costs, and the lease of facilities savings.  However,
the University of Houston System estimates that the amount of the
bonds issued will be adjusted to assure that the annual cost of
debt service payments plus additional physical plant operating
costs does not exceed the current appropriation for lease of
facilities at the University of Houston-Victoria, thus
potentially making this revenue neutral for the State.






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 Cost Out 
             Year      of  General    
                     Revenue Fund 001 
                                      
          1996                $393,750
          1997                 867,500
                                      
          1998                 296,814
                                      
          1999                 289,939
          2000                 291,939
                                      
                                      
                                      

       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:   Texas Public Finance Authority, Bond Review Board,    




Higher Education
                        Coordinating Board, University of Houston
System Administration
          LBB Staff: JK, LS, WRR