LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  March 5, 1997
         
         
      TO: Honorable Barry Telford, Chair            IN RE:  House Joint Resolution
                                                                No. 8, Committee Report 1st House, Substituted
          Committee on Pensions and Investments                              By: Stiles
          House
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on HJR8 ( Proposing 
a constitutional amendment to extend the full faith and credit 
of the state to support the Texas tomorrow fund.) this office 
has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by HJR8-Committee Report 1st House, Substituted
         
No fiscal implication to the State is anticipated.

The cost 
to the state for publication of the resolution is $71,000.
         

         
 
The resolution would propose a constitutional amendment to establish 
the Texas Tomorrow Fund (fund) as a constitutional trust fund, 
extend the full faith and credit of Texas to the fund, and allow 
fund assets to be invested in accordance with the prudent person 
rule.  The fund would be dedicated to the prepayment of tuition 
and fees for higher education under the prepaid higher education 
tuition program.

In the event there was not enough money 
in the fund to pay the tuition and fees for a beneficiary, the 
resolution would require the first money that came into the 
State Treasury that was not appropriated by the Constitution 
to be transferred to the fund to pay the tuition and required 
fees.

By extending the full faith and credit guarantee, the 
resolution would provide an additional degree of financial assurance 
to contract purchasers.  The Texas Veterans Land Board loan 
programs and the Hinson-Hazelwood student loan programs have 
the full faith and credit guarantee of the state.  These guarantees 
have never been used.

The fund was designed to be and is 
operating in a self-supporting manner as a trust fund.  By establishing 
the Texas Tomorrow Fund and allowing contracts to be written 
the Legislature has, in effect, created an implied state guarantee. 
 

Almost all successful and effective trust funds manage 
their assets under the prudent person rule.  The rule would 
allow the fund to, over the long term, provide superior investment 
returns and, thus, lower payments to contract purchasers of 
a fund plan.

The proposed constitutional amendment would 
be submitted to the voters at an election to be held November 
4, 1997. 

          
No fiscal implication to units of local government is anticipated.
          
   Source:            Agencies:   
                                         
                      LBB Staff:   JK ,PE