LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                              April 18, 1999
  
  
          TO:  Honorable Bill Ratliff, Chair, Senate Committee on Finance
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB805 by Ellis, Rodney (relating to the investment of the
               higher education fund), As Introduced
  
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*  No significant fiscal implication to the State is anticipated.        *
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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, BB, LD, PF, DB