LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 26, 2001 TO: Honorable Irma Rangel, Chair, House Committee on Higher Education FROM: John Keel, Director, Legislative Budget Board IN RE: HB658 by Junell (Relating to authorizing the issuance of revenue bonds for certain public institutions of higher education.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB658, As Introduced: negative impact of $(36,554) 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 $(16,834) * * 2003 (19,720) * * 2004 (19,300) * * 2005 (18,880) * * 2006 (18,460) * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Savings/(Cost) from * * General Revenue Fund * * 0001 * * 2002 $(16,834) * * 2003 (19,720) * * 2004 (19,300) * * 2005 (18,880) * * 2006 (18,460) * ***************************************************** Fiscal Analysis The bill authorizes the Board of Regents of Texas A&M University System to issue $100,000 of revenue bonds for Texas A&M International University, and would authorize the Board of Regents of the University of Houston System to issue $100,000 of revenue bonds for the University of Houston-Clear Lake. The bond proceeds would be used for the acquisitions, purchase, construction, renovation or equipping of buildings, facilities, and infrastructure. These bonds would be payable from pledged revenue, including student tuition. These bonds would not be general obligations of the State. However, the issuance of these bonds would have fiscal implications for the State. Although tuition income is pledged against the bonds, historically the Legislature has appropriated General Revenue to reimburse institutions of higher education for tuition used to pay the debt service. It is assumed that the Legislature would continue this policy. Methodology It is assumed that the bonds would be issued on September 1, 2001 at a seven percent interest rate, with a 20-year level debt service amortization. Based on calculations prepared by the Texas Public Finance Authority, the amount of debt service payments for fiscal years 2002 and 2003 would be $16,834 and $19,720, respectively. The total estimated amount of debt service from fiscal year 2002 to fiscal year 2021 is estimated to be $376,914. No amounts are included for operations and maintenance costs related to additional facilities. Operations and maintenance costs are provided to general academic institutions based on predicted square feet not actual square feet. However, if the increased space resulted in additional enrollment, it is possible that the predicted square feet and therefore operations and maintenance costs would increase. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 347 Texas Public Finance Authority, 352 Texas Bond Review Board, 781 Texas Higher Education Coordinating Board LBB Staff: JK, CT, PF, DB