LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session May 15, 1997 TO: Honorable Teel Bivins, Chair IN RE: House Bill No. 1043, As Engrossed Committee on Education By: Bailey Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB1043 ( Relating to the issuance of bonds under the Higher Education Authority Act.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB1043-As Engrossed No fiscal implication to the State is anticipated. Local Government Fiscal Analysis The bill would amend the Higher Education Authority Act, which permits the creation of education authorities to finance the construction of educational facilities. The bill would add a definition to Section 53.02, Education Code, for an accredited primary or secondary school. The definition would encompass both public and private schools that are accredited by the Texas Education Agency or a private accrediting body. Section 2 of the bill would expand the sources of revenue which can be pledged to make bond payments on debt issued by the authority. Section 3 would expand the entities for which an authority can finance and construct facilities to include all accredited primary or secondary schools. Current law limits the use of an authority for this purpose to only certain counties, and only for certain military related schools. Contracting for facilities through a higher education authority will not require voter approval, although a public notification period is required. This legislation would take effect immediately if sufficient votes are received. Methodology The impact of this bill would be in the possible access by school districts to new educational facilities constructed by a higher education authority. However, it is presumed that districts would be required to make lease payments for those educational facilities at a level comparable to the cost of debt needed to finance the projects. The bill would allow school districts to lease facilities constructed and financed by an authority. Since an authority can be created by any incorporated city or town, and because the facilities need not be within the incorporated limits of the city, virtually any school district would potentially be eligible to participate through an authority created for this purpose. Depending on the market conditions which affect debt service, most school districts would pay higher lease payments for a revenue bond financed project than if the district issued traditional debt for the same project. It would therefore likely be more costly to school districts to rent facilities from an authority than construct the same facilities financed by school district debt. Source: Agencies: 701 Texas Education Agency - Administration 304 Comptroller of Public Accounts 352 Bond Review Board LBB Staff: JK ,LP ,DH