LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 13, 2001 TO: Honorable Irma Rangel, Chair, House Committee on Higher Education FROM: John Keel, Director, Legislative Budget Board IN RE: HB1403 by Noriega (Relating to the eligibility of certain persons to qualify as residents of this state for purposes of higher education tuition or to pay tuition at the rate provided to residents of this state.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1403, As Introduced: negative impact of $(21,199,277) 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 $(11,674,221) * * 2003 (9,525,056) * * 2004 (46,199,111) * * 2005 (51,211,638) * * 2006 (51,716,295) * **************************************************** 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 $(11,674,221) $(11,674,221) * * 2003 (9,525,056) (9,525,056) * * 2004 (46,199,111) (8,056,139) * * 2005 (51,211,638) (7,087,662) * * 2006 (51,716,295) (7,592,319) * *************************************************************************** Fiscal Analysis The bill defines students who graduate from Texas high schools while living in the state with their parent, guardian or conservator as Texas residents for tuition and fee purposes, regardless of the citizenship or immigration status of the individual The student must reside in the state as for at least one year between the first day the person attended a public or private high school in the state and the date the person graduated from such a high school or received the equivalent of a high school diploma. The bill also permits a resident alien or a foreign national applying for lawful status under federal immigration law to Texas resident tuition and fees. Current state law provides that only US. citizens and permanent residents are eligible to establish residency. The bill exempts Mexican citizens from non-resident tuition and fee rates in any general academic teaching institution, public junior college or Texas State Technical College System component (institutions) located within a county within 100 miles of the border or in a county having a population of 100,000 or more. Current law authorizes Mexican students to pay in-state tuition and fees at certain schools near the border, when financial need of the student is established. Methodology Based on analysis prepared by the Texas Higher Education Coordinating Board (THECB), extending residency status to students who graduate from Texas high schools while living in the state with their parents would increase the number of students attending public institutions by 3,154. It is assumed that 70% of these students would attend community colleges and that 30% would attend universities. It is also assumed that the retention rates for these students would be 70%. The estimated loss of non-resident tuition is $6,577,036 in fiscal year 2002 and $4,871,511 in fiscal year 2003 for current students, who become eligible for exemptions under this provision. This amount would be offset by resident tuition paid by new students who would not have otherwise attended universities is estimated to be $1,068,980 in fiscal year 2002 and $1,818,170 in fiscal year 2003. Universities would also realize an increase in non-appropriated tuition revenue. However, these amounts would not impact State appropriations. Since appropriations for formula amounts are based on historical enrollment, additional formula costs for new students would not be incurred until fiscal year 2004. The additional General Revenue formula costs for new students at both universities and community colleges is estimated to be $19,071,486 in fiscal year 2004 and $22,061,988 in fiscal year 2005. The bill provision that allows certain aliens to qualify for residency for tuition and fee purposes would not have a significant fiscal impact to the state, because this provision is closely related to the new policy changes that are already in effect. Based on THECB analysis, extending nonresident tuition waivers for Mexican Nationals to institutions located in counties with populations of 100,000 or more would result in a loss of non-resident tuition of $6,237,445 in fiscal year 2002 and $6,599,972 in fiscal year 2003 for current students who become eligible for exemptions under this provision. This amount would be offset by resident tuition paid by new students who would not have otherwise attended universities, and is estimated to be $71,280 in fiscal year 2002 and $128,257 in fiscal year 2003. It is assumed that General Revenue would be needed to replace lost tuition revenue at universities which is estimated to be $6,166,165 in fiscal year 2002 and $6,471,715 in fiscal year 2003. Universities would also realize a reduction in non-appropriated tuition revenue. However, these amounts would not impact State appropriations. Since appropriations for formula amounts are based on historical enrollment, additional formula costs for new students would not be incurred until for fiscal year 2004. The additional General Revenue formula costs for new students at both universities and community colleges is estimated to be $2,978,815 in fiscal year 2004 and $4,135,646 in fiscal year 2005. 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. Source Agencies: 781 Texas Higher Education Coordinating Board, 783 University of Houston System Administration, 720 The University of Texas System, 752 University of North Texas LBB Staff: JK, CT, PF, DB