LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session February 18, 1997 TO: Honorable Irma Rangel, Chair IN RE: House Bill No. 269 Committee on Higher Education By: Counts House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB269 ( Relating to exempting members of the Texas National Guard from tuition charged by an institution of higher education.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB269-As Introduced Implementing the provisions of the bill would result in a net impact of $0 to General Revenue Related Funds through the biennium ending August 31, 1999. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. Fiscal Analysis The bill would exempt members of the Texas National Guard from tuition charged by an institution of higher education. To be eligible, the bill would require the student to be a Texas resident and agree to enlist in the National Guard (or, if already in the Guard, enlist for an additional period of time) as determined by the Adjutant General's Office). A student could receive an exemption under this program for up to 12 semesters. The bill would take effect beginning with the 1997 fall semester. Methodolgy The Texas Higher Education Coordinating Board, using data from the Adjutant General's Office, estimates that the bill would affect the 1150 guardsmen that are currently in college, taking an average of 8 hours per year; an additional 150 guardsmen would be expected to enroll in the first two years of the exemption program, and additional 100 during the third year. Thereafter, enrollments would be expected to remain constant. It is assumed that half of the students would be enrolled at universities and half in community colleges. Because of the base period methodology for funding enrollment at universities and community colleges, the bill would not affect general revenue appropriations during the 1998-99 biennium. Beginning in 2000-2001, the bill would result in increased formula costs for the additional university and community college students. Because of the all funds methodology of funding higher education, the loss of Other Educational and General Income (primarily tuition and fee revenue) at the universities would be a cost to General Revenue beginning in fiscal year 2000. Local community colleges districts would lose tuition revenues and incur additional local tax costs. For community college taxing districts, the exemption for currently-enrolled students would cost $101,775 in FY 1998, rising to $125,350 in FY2002. Additional students would result in costs to community college tax districts of $20,400 in FY1998, rising to $54,400 in FY2002. The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Five Year Impact: Fiscal Year Probable Probable Revenue Savings/(Cost) Gain/(Loss) from from General Other Revenue Fund Educational and General Income/ GR-Dedicated 0001 8022 1998 $0 ($156,400) 1998 0 (165,600) 2000 (536,400) (174,800) 2001 (545,600) (184,000) 2002 (545,600) (184,000) Net Impact on General Revenue Related Funds: The probable fiscal implication to General Revenue related funds during each of the first five years is estimated as follows: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1998 $0 1999 0 2000 (536,400) 2001 (545,600) 2002 (545,600) Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. Local community college districts would lose the tuition and fee income from students that would qualify under this bill. The additional students enrolling in community colleges would place an additional tax burden on the local community college taxing districts. The total of these two costs is estimated to be $122,175 in FY 1998, rising to $179,750 in FY 2002. Source: Agencies: 781 Higher Education Coordinating Board LBB Staff: JK ,LP ,LD