LEGISLATIVE BUDGET BOARD
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: HJR58 by Junell (proposing a constitutional amendment
relating to the investment of the permanent university
fund and to distributions from that fund to the
available university fund), As Engrossed
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HJR58, As Engrossed: positive impact of $0 through the biennium *
* ending August 31, 2001. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $0 *
* 2001 0 *
* 2002 0 *
* 2003 0 *
* 2004 0 *
****************************************************
All Funds, Five-Year Impact:
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* Fiscal Year Probable Revenue Gain/(Loss) to *
* the Available University Fund *
* 0011 *
* 2000 $33,600,000 *
* 2001 37,620,000 *
* 2002 41,250,000 *
* 2003 47,200,000 *
* 2004 49,750,000 *
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Fiscal Analysis
The constitutional amendment would allow The University of Texas System
Board of Regents (board) to determine the amount of investment return
from the Permanent University Fund (PUF) that would be distributed to the
Available University Fund (AUF). This distribution could be made from
the total return on all investment assets of the PUF.
When determining the amount to be distributed, the board of regents must:
not exceed seven percent of the average net fair market value of PUF
investment assets; provide the AUF with a stable and predictable stream
of annual distributions; maintain over time the purchasing power of PUF
investments and annual distributions; and not increase annual
distributions if the purchasing power of PUF investments for any rolling
10-year period is not preserved.
The expenses of managing PUF land and investments would continue to be
paid by the PUF.
Methodology
Distributions to the Available University Fund (AUF) are estimated to
increase 13.3% over The University of Texas System's (System) most
current estimate for Fiscal Year 2000 (8.9% above that estimated in the
Appropriations Bill). The increase for Fiscal Year 2001 is 14.8% over
the System's most current estimate (10.4% above that estimated in the
Appropriations Bill.)
As a result, the distribution would equal 4.5% of the most recent
12-quarter average of the corpus. Currently, it is estimated the
distribution would equal 3.97% of the most recent 12-quarter average of
the corpus.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 720 The University of Texas System Administration,
781 Higher Education Coordinating Board
LBB Staff: JK, BB, PF