LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session February 23, 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.), As Introduced ************************************************************************** * Estimated two-year Net Impact to General Revenue Related Funds for * * HB713, As Introduced: negative impact of $(102,617,751) 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 $(40,163,272) * * 2001 (62,454,479) * * 2002 (78,446,904) * * 2003 (92,392,440) * * 2004 (90,775,091) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Savings/(Cost) from Probable Savings/(Cost) from * * Year General Revenue Fund for General Revenue Fund for * * Scholarships Coordinating Board * * 0001 Administrative Costs * * 0001 * * 2000 $(39,372,682) $(790,590) * * 2001 (61,531,507) (922,972) * * 2002 (77,287,591) (1,159,313) * * 2003 (90,445,173) (1,947,267) * * 2004 (89,433,589) (1,341,502) * *************************************************************************** Technology Impact The Coordinating Board would need to develop an automated system to track students and to distribute funding to the institutions. Fiscal Analysis The bill would establish the Texas Gateway to the Future Scholarship Program, which would provide scholarships for entering freshman in an undergraduate or certificate program at Texas public or private institution of higher education. Beginning in the fall semester 2003, to qualify for the scholarship, a high school graduate must have completed the recommended or advanced high school curriculum. Students could enroll part or full-time. To maintain the scholarship, a student would have to make satisfactory academic progress toward a degree. For students attending a public institution, the scholarship would be the amount of tuition and required fees. For students attending private institutions, the scholarship amount would be the average statewide tuition and required fees in a baccalaureate degree program. The scholarships would be based on financial need. The scholarship amount would be reduced only if other gift aid for which the person is eligible exceeds the total cost of attendance. Separate from the costs indicated above, the bill would eliminate a number of existing scholarship programs and transfer these funds to the Coordinating Board to fund this scholarship program. The amount of general revenue transferred for these purposes is $1,255,578 in fiscal year 2000; $1,401,160 in fiscal year 2001; $145,582 in fiscal year 2002; $145,582 in fiscal year 2003; and $145,582 in fiscal year 2004. Because of the elimination of the New Horizons Scholarship Program, institutions of higher education would retain $735,000 per year in matching funds that could be used for other purposes. Methodology For purposes of this estimate, it is assumed "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. Historical information on the rate of high school graduates enrolling and being retained in community colleges and universities was used to determine the number of students receiving scholarships. Different enrollment and retention rates were used for freshmen enrolled in 1999 and those enrolled in 2003 (when recommended high school curriculum requirement is implemented). The Coordinating Board estimates an administrative expense of 1.5% to implement the program and indicates a need for an additional $200,000 for start-up of the program. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: LBB Staff: JK, CT, LD, PF