LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  April 8, 1997
         
         
      TO: Honorable Teel Bivins, Chair            IN RE:  Senate Bill No. 1811
          Committee on Education                              By: Nelson
          Senate
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on SB1811 ( Relating 
to energy conservation measures by institutions of higher education, 
including the financing of such measures.) this office has detemined 
the following:
         
         Biennial Net Impact to General Revenue Funds by SB1811-As Introduced
         
No fiscal implication to the State is anticipated.
         

         
 
Fiscal Analysis

The bill would specifically authorize the 
state's institutions of higher education to utilize the Master 
Lease Purchase Program (MLPP) operated by the Texas Public Finance 
Authority  to fund contracts for energy conservation measures 
so long as the costs of the energy conservation measures, including 
costs of design, engineering, installation, maintenance, repairs, 
and anticipated debt service requirements of the MLPP do not 
exceed the total energy and operating cost savings over a 10 
year period  beginning after the final date of energy saving 
project installation.
          
Methodology

Savings would be realized by institutions of 
higher education.  The amount of the savings would be dependent 
upon the number and size of projects that would be financed 
through the MLPP program.   For illustration of the potential 
savings to the state,  if an institution of higher education 
were to finance a $10,000,000 project for ten years through 
the MLPP at an all-in-financing at the state's tax-exempt cost 
of 4.5% versus a vendor lease-purchase at a rate of 7.5%, the 
institution would save $1,836,882 in interest costs over the 
financing period.  If spread between tax-exempt (MLPP) and commercial 
financing rates were greater than 3.0%, the savings would be 
greater than illustrated above.  If the spread were less than 
3.0% then the savings would be less.

Administrative costs 
to the Texas Public Finance Authority for administering the 
MLPP program would be absorbed in TPFA's operating budget.

No 
fiscal implication to units of local government is anticipated.
          
   Source:            Agencies:   347   Texas Public Finance Authority
                                         
                      LBB Staff:   JK ,LP ,LD