LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session May 3, 1999 TO: Honorable Sherri Greenberg, Chair, House Committee on Pensions & Investments FROM: John Keel, Director, Legislative Budget Board IN RE: SB805 by Ellis, Rodney (Relating to the investment of the higher education fund.), As Engrossed ************************************************************************** * No significant fiscal implication to the State is anticipated. * ************************************************************************** Fiscal Analysis The bill would expand the Comptroller of Public Accounts' investment authority over the Higher Education Fund (HEF). The expanded authority would apply the same "prudent person" rule, as dictated by the Texas Constitution, that applies to the University of Texas System's investment of the Permanent University Fund. Methodology The Comptroller's Office estimates that the broad investment authority would result in higher investment returns. The Comptroller indicates that these higher returns would allow the HEF to reach $2 billion in 10 years (rather than the 17 years as projected under the current investment authority). When the HEF reaches $2 billion, the annual state appropriation of $50 million to the HEF would cease. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 720 The University of Texas System Administration, 304 Comptroller of Public Accounts LBB Staff: JK, PE, BB, LD, PF, DB