LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  March 10, 1997
         
         
      TO: Honorable Irma Rangel, Chair            IN RE:  House Bill No. 1043
          Committee on Higher Education                              By: Bailey
          House
          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 Introduced
         
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