LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 7, 1997
TO: Honorable Irma Rangel, Chair IN RE: House Bill No. 2456, Committee Report 1st House, Substituted
Committee on Higher Education By: Swinford
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB2456 ( Relating
to state funding for and tuition charged to certain undergraduate
students who accumulate excessive credit hours and to the number
of credit hours required in a degree program.) this office has
detemined the following:
Biennial Net Impact to General Revenue Funds by HB2456-Committee Report 1st House, Substituted
Implementing the provisions of the bill would result in a net
positive impact of $13,200,000 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 amend the Education Code to require the Texas
Higher Education Coordinating Board (THECB) to exclude, for
formula funding purposes, the semester credit hours of resident
undergraduate students that had previously attempted 170 or
more credit hours for courses taken at any institution of higher
education. The bill would provide certain exemptions. Eliminating
the excessive credit hours for formula funding would apply to
funding beginning with the 1997 fall semester.
The bill would
allow the institutions to charge an increased tuition, without
exceeding the out-of-state tuition rate, for students who had
attempted 170 or more credit hours. The tuition increase for
excessive undergraduate hours would be effective with tuition
charged for the 1997 fall semester.
This bill would authorize
tuition rebates of up to $1,000 for Texas resident students
who earned an undergraduate degree by attempting no more than
six hours above the minimum credit hours required for that program,
including the hours transferred from another institution and
hours earned through placement tests. The bill would require
the institutions to pay the tuition rebates from their local
funds and would authorize institutions to receive general revenue
reimbursements during the appropriations process. Tuition rebates
for students who earned an undergraduate diploma with no more
than six hours above the minimum requirements for the program
would only apply to students completing a baccalaureate degree
on or after September 1, 1997.
The bill would limit the credit
hour requirements for undergraduate degree programs to 120 but
would allow THECB to provide certain exceptions. For programs
that would receive exemption from the 120 hour requirement,
THECB would require the institutions to reestablish the reasonableness
of the requirement every five years. Limiting the credit hour
requirements would not affect undergraduate degree programs
in existence on January 1, 1997 until September 1, 1999.
Methodolgy
Undergraduate Semester Credit Hour Cap
The Coordinating Board
estimates that the number of semester credit hours attempted
in excess of 170 adjusted for the exceptions provided by the
bill is 150,000, or 5,000 full-time equivalent students that
would be eliminated from formula funding each year. The average
general revenue contribution for each upper division student
is $3,807. Therefore, the savings associated with this provision
would be $19,000,000 as indicated in the table below. Not all
of these savings would be realized by institutions of higher
education. Certain savings associated with employee benefits
would accrue to the Teacher Retirement System and Comptroller
of Public Accounts.
Using an alternative method, the Texas
Performance Review estimated the general revenue the savings
to be $7,556,000 for the 1998-99 biennium. From FY2000 and
beyond these savings were adjusted to $4,640,000 to reflect
the increased efficiency of institutions to graduate more students
in a timely manner.
Institutions could charge these students
tuition at the higher nonresident rate to offset the loss of
general revenue formula funding. Therefore, there would be
no additional impact related to the all funds methodology of
higher education funding.
Tuition Rebate
The Coordinating
Board estimates that approximately 55,000 students earn baccalaureate
degrees from Texas public universities each year and that about
32 percent of these students would be eligible for the tuition
rebate in 1998. Therefore, 17,600 students would be eligible
for the tuition rebate in FY 1998, increasing up to 19,800 by
FY2002. The Coordinating Board also estimates that because
of the rebate students would take fewer semester credit hours.
This would result in 1,467 fewer full-time student equivalents
enrolling in FY1998, increasing up to 4,583 in FY2002. The
Coordinating Board estimates the net impact of this provision
would be a cost to general revenue of $12.0 million in FY1998,
decreasing to $2.3 million in FY2002.
The Texas Performance
Review did not estimate the fiscal impact related to the tuition
rebate.
Administrative Costs
To implement the undergraduate
cap and the tuition rebate programs there would be certain administrative
and record keeping costs at each institution to ensure that
the appropriate tuition was charged and rebates provided. It
is estimated that the initial cost of establishing the necessary
record keeping system to be approximately $4 per student in
FY1998. There are approximately 400,000 students enrolled at
public universities. Ongoing costs are not estimated to be
significant.
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 Probable
Savings/(Cost) Savings/(Cost) Savings/(Cost)
from General from General from General
Revenue Fund for Revenue Fund for Revenue Fund for
170 Semester Tuition Rebates Administrative
Credit Hour Cap Costs
0001 0001 0001
1998 $19,000,000 ($12,000,000) ($1,600,000)
1998 19,000,000 (11,200,000)
2000 19,000,000 (8,200,000)
2001 19,000,000 (5,300,000)
2002 19,000,000 (2,300,000)
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 $5,400,000
1999 7,800,000
2000 10,800,000
2001 13,700,000
2002 16,700,000
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: Agencies: 304 Comptroller of Public Accounts
781 Higher Education Coordinating Board
LBB Staff: JK ,LP ,LD