LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 9, 1997
TO: Honorable Bill Ratliff, Chair IN RE: Senate Bill No. 1485, Committee Report 1st House, Substituted
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-Committee Report 1st House, Substituted
Implementing the provisions of the bill would result in a net
impact of $0 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 up to
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 apply
to students who enter as first time freshmen in or after the
fall 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 three 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 would go into effect with students who enter
as first time freshmen in or after the fall 1997 semester.
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 students who enter as first time freshmen in or after the
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 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
each year beginning in FY2003. 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. Since
this provision of the bill is effective for students who first
enter in Fall 1997, it is estimated that savings would begin
in FY2003.
Institutions could charge these students tuition
up to the higher nonresident rate to offset the loss of general
revenue formula funding; however pursuant to the legislation,
these funds would not be counted in the tuition estimate for
formula funding purposes. 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 20 percent
of these students would be eligible for the tuition rebate in
1998. Therefore 11,000 students would be eligible for the tuition
rebate in FY2001. The Coordinating Board also estimates that
because of the rebate students would take fewer semester credit
hours. This would result in 3,667 fewer full time student equivalents
enrolling in FY2001. The Coordinating Board estimates the net
impact of this provision would be a net savings to general revenue
of $3.0 million in FY2001.
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 assumed that institutions
would modify their systems over that next four years at no cost
to the state. 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
Savings/(Cost)
from General
Revenue Fund
0001
1998 $0
1998 0
2000 0
2001 2,600,000
2002 2,600,000
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 $0
1999 0
2000 0
2001 2,600,000
2002 2,600,000
Similar annual fiscal implications In FY2003 savings would increase
to $18.5 million. 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