LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 6, 1997 TO: Honorable Bill Ratliff, Chair IN RE: Senate Bill No. 1038 Committee on Finance By: Duncan Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB1038 ( Relating to the authority of the board of regents of Texas Tech University to issue certain bonds and notes on behalf of Texas Tech University and Texas Tech University Health Sciences Center.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB1038-As Introduced No fiscal implication to the State is anticipated. FISCAL ANALYSIS The bill would authorize the Board of Regents of Texas Tech University to combine Higher Education Fund bond issues for Texas Tech University and Texas Tech Health Sciences Center. METHODOLOGY Currently, the two institutions issue bonds separately. Since the debt service and related costs would be paid from Higher Education Fund allocations defined by statute, no fiscal impact to the State is anticipated. However, the bill would result in reduced bond issuance costs and more efficient administrative and financial reporting functions. The amount of savings would depend upon the size and type of the issue, as well as contractual arrangements with bond finance consultants. In addition, the Texas Tech University Health Sciences Center would be able to take advantage of interim financing during the construction phase and would realize additional cost savings for reduced interest costs. As a result, Texas Tech University and Texas Tech University Health Sciences Center could use less of the Higher Education Fund allocation for interest and bond issuance costs and more for buildings and other capital items. Texas Tech University and Texas Tech University Health Sciences Center estimate interest and bond issuance costs would be reduced by $1.7 million for the 1998-99 biennium. LOCAL No fiscal implication to units of local government is anticipated. Source: Agencies: 739 Texas Tech University Health Sciences Center 733 Texas Tech University 352 Bond Review Board LBB Staff: JK ,RR ,DB