LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 6, 1997
TO: Honorable Bill Ratliff, Chair IN RE: Senate Bill No. 1485
Committee on Finance By: Bivins
Senate
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-As Introduced
Implementing the provisions of the bill would result in a net
positive impact of $8,200,000 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 allow the governing
board of an institution of higher education to charge the out-of-state
tuition rate to resident undergraduate students enrolled in
a baccalaureate program who have already earned 170 or more
semester credit hours for courses taken as an undergraduate.
The bill provides certain exemptions to the 170 hour cap.
The authority to charge out-of-state tuition rates for resident
undergraduate students who had earned over 170 hours would take
effect with the 1997 fall semester.
The bill would allow
tuition rebates of a portion of the student's undergraduate
tuition of up to $1,000 for students who had earned an undergraduate
degree with no more than six additional hours above the minimum
credit hours required for that program. The bill would require
institutions to pay the tuition rebates from their local funds
and to receive general revenue reimbursements during the appropriations
process. Tuition rebates for students who earned an undergraduate
degree with no more than six additional hours over the minimum
requirements for the program would go into effect with students
completing a degree program on or after September 1, 1997.
The
bill would require the Texas Higher Education Coordinating Board
to exclude, for formula funding purposes, the semester credit
hours of resident undergraduate students who had already earned
170 hours and could be charged out-of-state tuition. Eliminating
the excessive credit hours from formula funding would apply
to funding beginning with 1997 fall semester.
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 130,000,
or 4,333 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 $16,500,000
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, increase
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 $16,500,000 ($12,000,000) ($1,600,000)
1998 16,500,000 (11,200,000)
2000 16,500,000 (8,200,000)
2001 16,500,000 (5,300,000)
2002 16,500,000 (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 $2,900,000
1999 5,300,000
2000 8,300,000
2001 11,200,000
2002 14,200,000
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