LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 9, 1997 TO: Honorable Bill Ratliff, Chair IN RE: Senate Bill No. 576, Committee Report 1st House, Substituted Committee on Finance By: Sibley/et al. Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB576 ( relating to the establishment of the Texas New Horizons Scholarship Trust Fund to exempt worthy high school graduates from tuition and fees at public institutions of higher education) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB576-Committee Report 1st House, Substituted Implementing the provisions of the bill would result in a net negative impact of $(4,000,000) 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 Subchapter D, Chapter 54 of the Education Code to establish the Texas New Horizons Scholarship Fund and would require the Texas Higher Education Coordinating Board to issue Texas New Horizons Scholarships to qualified high school graduates based on certain educational and economic criteria. The bill would create a new special fund, the New Horizons Scholarship Trust Fund, outside the treasury but in trust of the Comptroller. Money in the fund could be spent without appropriation but only to fund the scholarship program. Interest and income to the fund would be deposited in the fund. The Coordinating Board would be authorized to accept gifts and grants from any public or private sources. The bill would authorize the Coordinating Board to spend up to 2.5 percent of the deposits into the fund for administrative costs. The bill would amend Section 74.3011 of the Property Code. This would direct local telephone exchange companies to deliver money to the Texas New Horizons Scholarship Trust Fund instead of voluntarily delivering money to a rural scholarship fund. The local telephone companies would file with the Comptroller verification of the amount of money delivered. A claim for money delivered to the trust fund would be filed with the local telephone exchange company and forwarded to the Coordinating Board. The Coordinating Board would be authorized to pay the claim from the trust fund if determined valid. A person aggrieved by the claim decision could file suit against the Coordinating Board in a district court in Travis County. The bill would repeal Section 74.3012 of the Property Code, relating to delivery of money to urban scholarship funds. Methodolgy The trust fund would contain money from gifts and grants and general revenue if appropriated, and money that previously could have been deposited in a rural/urban scholarship fund to the credit of the General Revenue Fund 0001. Under current law, deposits to rural/urban scholarship funds are capped at $800,000 per year. In 1996, telephone exchange companies deposited $800,000 in these funds and the balance, approximately $2 million, to the credit of the General Revenue Fund. The potential fiscal impact of this bill is based on the 1996 experience. 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 Revenue Gain/(Loss) from General Revenue Fund 0001 1998 ($2,000,000) 1998 (2,000,000) 2000 (2,000,000) 2001 (2,000,000) 2002 (2,000,000) 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 ($2,000,000) 1999 (2,000,000) 2000 (2,000,000) 2001 (2,000,000) 2002 (2,000,000) 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: 781 Higher Education Coordinating Board 304 Comptroller of Public Accounts LBB Staff: JK ,RR ,LD