LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session March 8, 1999 TO: Honorable Irma Rangel, Chair, House Committee on Higher Education FROM: John Keel, Director, Legislative Budget Board IN RE: HB713 by Cuellar (Relating to the consolidation, modification, or repeal of student financial aid, grant, and scholarship programs or tuition and fee waivers and the creation of the Texas Gateway to the Future Scholarship Program ), Committee Report 1st House, Substituted ************************************************************************** * Estimated Two-Year Net Impact to General Revenue Related Funds for * * HB713, Committee Report 1st House, Substituted: negative impact * * of $(96,429,378) through the biennium ending August 31, 2001. * * * * The bill would make no appropriation but could provide the legal * * basis for an appropriation of funds to implement the provisions of * * the bill. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2000 $(34,814,190) * * 2001 (61,615,188) * * 2002 (92,699,814) * * 2003 (131,558,213) * * 2004 (140,855,483) * **************************************************** All Funds, Five-Year Impact: ************************************************************************** *Fiscal Probable Probable Probable * * Year Savings/(Cost) from Savings/(Cost) from Savings/(Cost) from * * General Revenue Fund General Revenue Fund General Revenue Fund * * for Scholarships for Coordinating for Increaes in * * 0001 Board's Formula Funding * * Administrative Costs 0001 * * 0001 * * 2000 $(34,004,128) $(810,062) $0 * * 2001 (60,606,097) (1,009,091) 0 * * 2002 (90,212,024) (1,453,180) (1,034,610) * * 2003 (128,496,161) (2,027,442) (1,034,610) * * 2004 (137,612,721) (2,164,191) (1,078,571) * ************************************************************************** Fiscal Analysis The bill would establish the Texas Gateway to the Future Scholarship Program. The program would provide college scholarships for a student who graduated high school not earlier than the 1998-99 school year. The student must have completed the recommended or advanced high school curriculum or equivalent curriculum. If the student's high school did not offer the entire recommended or advanced high school curriculum or equivalent curriculum, the student must have taken all the courses offered. Students would be obliged to meet financial need requirements and to enroll at least one-half of a full course load. To maintain the scholarship, a student would have to make satisfactory academic progress toward a degree. The amount of the scholarships would be based on the average cost of tuition and fees at a public university, public community college, or public technical institute, as appropriate. The scholarship amount would be reduced only if other gift aid for which the person is eligible exceeds the total cost of attendance. The Coordinating Board (THECB) would administer the program, including defining financial need requirements and conduct a study of the relationship of the college performance of students to their participation in the recommended or advanced high school curriculum. THECB would develop a center for financial aid information and establish a new advisory committee to develop information provided by the center. The center would maintain a toll-free telephone line. The bill would require the Texas Education Agency to expand the minimum standards for school district staff development to include guidelines for principals, counselors, and teachers to provide middle school students, junior high school students, high school students, and their parents with information about higher education, including financial aid opportunities. A school district would be limited in the percentage of recommended or advanced curriculum courses that are offered by distance learning methods. Separate from the costs indicated above, the bill would eliminate a number of existing scholarship programs and transfer these funds to THECB to operate the scholarship program. Two of these programs are phased out over a four-year period. The amount of general revenue transferred for these purposes is $543,528 in fiscal year 2000; $882,108 in fiscal year 2001; $338,580 in fiscal year 2002; $338,580 in fiscal year 2003; and $338,580 in fiscal year 2004. Because of the phasing out of the New Horizons Scholarship Program, institutions of higher education would retain their portion of the matching funds which could be used for other purposes. The $735,000 per year in local match would be phased out over a four-year period. Methodology For purposes of this estimate, it is assumed that "financial need" refers to students whose family income level was less than $15,000 (these students have an expected family contribution of zero). To determine scholarship costs, the statewide average costs of tuition and fees at a community college or four-year institution were used. Estimates of the number of eligible students were made based on the number of high school students expected to complete the recommended or advanced or equivalent curriculum. Historical information on the rate of high school graduates enrolling and being retained in institutions of higher education was used to determine the number of students receiving scholarships. Additional general revenue would be necessary to cover the increase in formula funding for additional students. THECB estimates an administrative expense of 1.5 percent to implement the program each year. It indicates a need for an additional $200,000 for start-up of the program and $100,000 each year for the operation of the financial aid center. Local Government Impact No significant fiscal implication to school districts is anticipated. Source Agencies: LBB Staff: JK, CT, PF