Austin, Texas
                    FISCAL NOTE, 76th Regular Session
                                May 6, 1999
          TO:  Honorable Bill Ratliff, Chair, Senate Committee on Finance
        FROM:  John Keel, Director, Legislative Budget Board
       IN RE:  HB1945 by Junell (relating to the creation of permanent
               funds for certain public health purposes conducted by
               institutions of higher education), Committee Report 2nd
               House, Substituted
*  Estimated Two-year Net Impact to General Revenue Related Fundsfor     *
*  HB1945, Committee Report 2nd House, Substituted:  $0 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.                                                             *
*                                                                        *
*  The bill would transfer $580 million in tobacco settlement            *
*  receipts, anticipated to be deposited in the General Revenue Fund,    *
*  to permanent higher education funds.                                  *
General Revenue-Related Funds, Six-Year Impact:
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       1999                                   $0  *
          *       2000                                    0  *
          *       2001                                    0  *
          *       2002                                    0  *
          *       2003                                    0  *
          *       2004                                    0  *
All Funds, Six-Year Impact:
*Fiscal    Probable Revenue Gain/(Loss)    Probable Revenue Gain/(Loss)   *
* Year       from Tobacco Settlement         from Permanent Funds for     *
*                    Receipts               Institutions of Higher Ed.    *
*                      5040                        (Aggregated)           *
*  1999                    $(580,000,000)                    $580,000,000 *
*  2000                                 0                      24,425,000 *
*  2001                                 0                      25,239,000 *
*  2002                                 0                      26,188,000 *
*  2003                                 0                      27,069,000 *
*  2004                                 0                      28,559,000 *
Fiscal Analysis
The bill would create the Permanent Health Fund for Higher Education in
the State Treasury outside General Revenue Fund.  On the effective date
of the bill, the Comptroller would transfer to the fund amounts
appropriated in the General Appropriations Act for the Permanent Health
Fund for Higher Education.

The fund would be administered by the University of Texas System Board of
Regents on behalf of health-related institutions.  Sixty percent of
investment returns to the fund would be distributed in equal amounts to
each institution, with the remainder distributed based on specific
funding criteria.

The bill would establish permanent 13 endowment funds in the treasury
outside the General Revenue Fund for institutions of higher education.
On the effective date of the bill, the Comptroller would transfer a
total of $580 million to the endowment funds.  Investment returns for
each fund would be used only for research and other programs that are
conducted by the institution for which the fund is established and that
benefit the public health.
The Comptroller of Public Accounts has assumed that transfers will be
made from General Revenue Account 5040 - Tobacco Settlement Temporary
Holding account, and that they would occur in fiscal 1999.  The
Comptroller also assumed that there would be no further transfers of
State Treasury money to the funds, and that no gifts or grants from
other sources would be received by the funds.  A projected rate of
return appropriate to the management criteria established for each fund
was applied to the deposits in the new funds to arrive at annual
investment returns.
Local Government Impact
No significant fiscal implication to units of local government is
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, BB, RS