LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session March 15, 1999 TO: Honorable Royce West, Chair, Senate Subcommittee on Higher Education FROM: John Keel, Director, Legislative Budget Board IN RE: SB184 by Barrientos (Relating to the student loan program administered by the Texas Higher Education Coordinating Board; authorizing the issuance of bonds), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB184, As Introduced: positive impact of $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. * ************************************************************************** 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: *************************************************************************** *Fiscal Probable Savings/(Cost) from Probable Revenue Gain/(Loss) * * Year Student Loan Funds for Debt from Student Loan Funds * * Service * * 2000 $0 $0 * * 2001 (5,900,000) 5,900,000 * * 2002 (11,300,000) 11,300,000 * * 2003 (16,900,000) 16,900,000 * * 2004 (22,600,000) 22,600,000 * *************************************************************************** Fiscal Analysis The bill would authorize $400 million in general obligation bonds for the Texas Higher Education Coordinating Board for their college student loan program. The bill would become effective upon the passage of a constitutional amendment by the voters. The college student loan program is self-supporting, with program revenue sufficient to pay the debt service on the bonds and the costs of operating the program. Should the program revenue be insufficient, because the bonds are general obligations of the state, it would require a draw on the general revenue fund. Historically, this program has never required general revenue. Methodology It is assumed that the Coordinating Board would issue $75 million in general obligation bonds per year beginning in 2001. The Coordinating Board has existing authority of $150 million outstanding that it expects to issue in fiscal years 1999 and 2000. The debt service would be paid from revenue from the student loan repayments. Debt service is estimated at $5.9 million in 2001, $11.3 million in 2002, $16.9 million in 2003, and $22.6 million in 2004. The Coordinating Board would have additional administrative costs associated with the additional loans that would be provided to students under this new authority, but these costs are not expected to be significant since the agency would be retiring loans as new loans are made. Any administrative costs would be paid from revenue from the student loan repayments. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: LBB Staff: JK, CT, LD