LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session February 12, 2001 TO: Honorable Irma Rangel, Chair, House Committee on Higher Education FROM: John Keel, Director, Legislative Budget Board IN RE: HB51 by Chavez (Relating to tuition and fee exemptions for the children of certain professional instructional employees enrolled at a public institution of higher education.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB51, As Introduced: negative impact of $(27,028,204) through the * * biennium ending August 31, 2003. * * * * 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 * * 2002 $0 * * 2003 (27,028,204) * * 2004 (11,760,710) * * 2005 (12,734,970) * * 2006 (13,375,198) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Savings/(Cost) from Probable Revenue Gain/(Loss) * * Year General Revenue Fund from Estimated Other * * 0001 Educational and General Income * * Account/ GR-Dedicated * * 0770 * * 2002 $0 $0 * * 2003 (27,028,204) (27,028,204) * * 2004 (11,760,710) (11,760,710) * * 2005 (12,734,970) (12,734,970) * * 2006 (13,375,198) (13,375,198) * *************************************************************************** Fiscal Analysis The bill provides an exemption from undergraduate tuition, or tuition and fees at public higher education institutions for children of professional instructional employees in public schools. The exemption for tuition would be applicable to children of instructional employees with 10 years of service and those whose parents with 15 years of service would receive an exemption from both tuition and fees. The bill also allows higher education institutions to adopt a policy providing students, who became eligible to receive an exemption from tuition or tuition and fees to receive a refund for the amount of tuition or tuition and fees paid during the preceding three years. The bill would take effect beginning with the fall semester in 2002 (fiscal year 2003). Methodology The Texas Higher Education Coordinating Board (THECB) estimates that 6,233 students would be eligible for tuition exemptions only. Of this number, 55%, or 3,428, are assumed to attend universities; the remaining 45%, or 2,805, would attend community colleges. THECB estimated that 12,653 students would be eligible for both tuition and fee exemptions. Again, 55%, or 6,959, are assumed to attend universities and 45%, or 5,964, would attend community colleges. THECB estimated that the tuition exemptions would reduce university tuition revenues $10.8 million beginning in fiscal year 2003, increasing by 8% a each year to $13.4 million in fiscal year 2006. An equivalent amount of general revenue funds would be needed to reimburse universities for the loss of this revenue. In addition to tuition and fee exemptions, it is assumed that all students who become eligible for the refund of tuition and fees would request the refund in fiscal year 2003. Based on analysis prepared for similar legislation introduced in previous sessions, it is estimated that refunds to university students would equal 150% of tuition and fee exemptions for fiscal year 2003 or $16.2 million. Universities would also realize a reduction in non-appropriated tuition revenue. However, these amounts would not impact state appropriations. Local Government Impact General revenue would not be used to offset the loss of tuition and fee revenue at community colleges, resulting in a revenue reduction of $6.8 million in fiscal year 2003, increasing to $8 million in fiscal year 2006. It is assumed that all students who become eligible for the refund of tuition and fees would request the refund in fiscal year 2003. It is estimated that refunds to community college students would equal 50% of tuition and fee exemptions for fiscal year 2003, or $3.4 million Source Agencies: 781 Texas Higher Education Coordinating Board, 701 Texas Education Agency, 304 Comptroller of Public Accounts LBB Staff: JK, CT, PF, DB