LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session February 27, 2001 TO: Honorable Irma Rangel, Chair, House Committee on Higher Education FROM: John Keel, Director, Legislative Budget Board IN RE: HB1545 by Uher (Relating to the operation, regulation, and administration of public institutions of higher education.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1545, As Introduced: negative impact of $(283,966,000) 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 $(283,966,000) * * 2003 0 * * 2004 0 * * 2005 0 * * 2006 0 * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Revenue Gain/(Loss) Probable Revenue Gain/(Loss) * * Year from General Revenue from New Higher Education Fund * * Fund-Dedicated, Higher outside Treasury * * Education Institution * * 0001 * * 2002 $(283,966,000) $283,966,000 * * 2003 0 0 * * 2004 0 0 * * 2005 0 0 * * 2006 0 0 * *************************************************************************** Fiscal Analysis The bill would exempt higher education institutions (institutions) from several State regulations or requirements. Institutions would be exempted from purchasing regulations, except rules regarding historically underutilized businesses, and could purchase goods or services by the method that provides the best value. Institutions would be exempted from statutes regarding Texas Correctional Industries and inmate labor. Institutions would be exempted from regulations regarding leave and holidays. Leave provisions for employees at institutions could be amended to allow institutions to combine vacation leave, sick leave and holidays. Institutions would be required to enter into a memorandum of understanding with the Teacher Retirement System of Texas, the Employees Retirement System of Texas, and the Texas Higher Education Coordinating Board concerning awards of accrued leave or other related issues. The bill authorizes institutions to grant merit salary increases, including one-time merit payments. The bill authorizes institutions to pay employees with multiple appointments for working more than 40 hours a week in lieu of compensatory time. The bill authorizes institutions to employ a person who has retired from state government. The bill allows institutions to notify employees by use of electronic media. The bill authorizes institutions to pay employees for the accrued balance of the employee's vacation time, even if the employee is re-employed by the state within 30 days of separation. The bill authorizes institutions to reduce employees salary for parking and would eliminate the provision that these funds be used only for employee parking facilities. In addition, the bill allows institutions to reduce employees' salary for club memberships, recreational sport membership or similar programs. The bill authorizes institutions to exempt full-time employees from tuition and fees. The bill authorizes institutions to prorate refunds and exemptions of tuition and fees. Institutions would be exempted from depositing tuition, laboratory and special course fees in the state treasury. This bill would simplify reporting requirements for institutions, and it would eliminate the requirement that certain institutions secure the opinion of the Attorney General on the conveyance of title of any real property given to those institutions. Institutions would be exempted from strategic planning requirements. This bill authorizes institutions to charge a credit card user a processing fee. Methodology Article 1 of this bill would partially implement recommendation ED-4 from the Comptroller's report, e-Texas: Smaller, Smarter, Faster Government. This portion of the bill would simplify and deregulate the procurement process at institutions of higher education. Although institutions could save money under the bill's provisions, it is assumed any funds saved through greater efficiencies would be retained by the institutions for use elsewhere, resulting in no significant fiscal impact on the State. The provisions of the bill addressing leave, merit salary increases, and hiring retirees could have an effect on the budgets of institutions of higher education, as well as on the State's retirement systems. Additional information from the institutions is needed to determine the potential cost for these provisions. The provision that allows institutions to exempt employees from some or all of tuition or fees could result in a loss of tuition income or dedicated general revenue accounts. It is assumed that the general revenue would be needed to reimburse institutions for the loss of tuition income. Additional information from the institutions is needed to determine the potential cost. Institutions could also realize a reduction in non-appropriated tuition revenue. However, these amounts would not impact State appropriations. Simplifying reporting requirements of universities could reduce administrative costs. It is assumed that any funds saved through greater efficiencies would be retained by the institutions for use elsewhere, resulting in no significant fiscal impact on the State. The provisions of the bill that would allow institutions to retain control of tuition and fees would have a negative effect on general revenue. In estimating the potential loss, the Comptroller's Office assumed that institutions would receive an appropriation in fiscal year 2002 from their existing dedicated general revenue account balances on hand at the close of fiscal year 2002. There would be a corresponding gain to the local funds of the institutions. Allowing institutions of higher education to charge a convenience fee to students using a credit card to pay for tuition, fees and other charges would increase revenues to the institutions. However, these fees would be auxiliary in nature and would not impact State appropriations. Local Government Impact General revenue would not be used to offset the loss of tuition and fee revenue for employees at community colleges, resulting in a potential revenue reduction for community colleges. Source Agencies: 781 Texas Higher Education Coordinating Board, 304 Comptroller of Public Accounts LBB Staff: JK, CT, DB