LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
May 1, 1997
TO: Honorable Irma Rangel, Chair IN RE: Senate Bill No. 1485, Committee Report 2nd House, Substituted
Committee on Higher Education By: Bivins
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on SB1485 ( Relating
to the tuition charged to certain students at public institutions
of higher education and to state funding related to those students.)
this office has detemined the following:
Biennial Net Impact to General Revenue Funds by SB1485-Committee Report 2nd House, Substituted
Implementing the provisions of the bill would result in a net
positive impact of $30,200,000 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 require the Texas Higher Education Coordinating
Board to exclude, for formula funding purposes, the semester
credit hours of resident undergraduate students that had previously
attempted 170 or more credit hours. The bill would provide
certain exemptions. This section would apply to funding for
1998-99. 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,
beginning with the fall semester 1997.
The 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.
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, effective for students who enter a baccalaureate degree
program on or after September 1, 1997.
The bill would limit
the credit hour requirements for undergraduate degree programs
to 120 unless exceptions are provided by the Coordinating Board.
Methodolgy
Undergraduate Semester Credit Hour Cap
The Coordinating Board
estimates that the number of semester credit hours in excess
of 170 adjusted for the exceptions provided by the bill is 125,000,
or 4,167 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 $15,900,000
for each year for the 1998-99 biennium as indicated in the table
below. Savings in the subsequent biennia would probably be
less as students change their behavior regarding their degree
plan. For purposes of the fiscal note, it is estimated that
the savings would decrease by $2 million per year beginning
in fiscal year 2000. Not all of the 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
24 percent of these students would be eligible for the tuition
rebate in 2002. Therefore, 11,000 students would be eligible
for the tuition rebate. The Coordinating Board also estimates
that because of the rebate students would take fewer semester
credit hours which would result in 4,583 fewer full-time student
equivalents enrolling. The Coordinating Board estimates the
net impact of this provision would be a savings to general revenue
of $4.25 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 $15,900,000 $0 ($1,600,000)
1998 15,900,000 0 0
2000 13,900,000 0 0
2001 11,900,000 0 0
2002 9,900,000 4,250,000 0
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 $14,300,000
1999 15,900,000
2000 13,900,000
2001 11,900,000
2002 14,150,000
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 ,LP ,LD