LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session Revision 1 April 23, 2001 TO: Honorable Barry Telford, Chair, House Committee On Calendars FROM: John Keel, Director, Legislative Budget Board IN RE: HB1640 by Rangel (Relating to the establishment of a school of pharmacy at Texas A & M-Kingsville.), Committee Report 1st House, Substituted ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1640, Committee Report 1st House, Substituted: negative impact * * of $(2,655,279) through the biennium ending August 31, 2003. * * * * It is anticipated that the Conference Committee Report on CSSB 1, * * the General Appropriations Act, will include funding for this item. * * * * * * This 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 $(350,000) * * 2003 (2,305,279) * * 2004 (4,305,279) * * 2005 (4,555,279) * * 2006 (6,961,349) * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Savings/(Cost) from * * General Revenue Fund * * 0001 * * 2002 $(350,000) * * 2003 (2,305,279) * * 2004 (4,305,279) * * 2005 (4,555,279) * * 2006 (6,961,349) * ***************************************************** Fiscal Analysis The bill permits the Texas A&M University System Board of Regents (Board) to establish and maintain a school of pharmacy (school) at Texas A&M University-Kingsville. The Board could offer courses leading to degrees in pharmacy education and award those degrees. The Texas Higher Education Coordinating Board would prepare an impact statement on the implementation of the bill by August 31, 2002. Methodology Based on analysis prepared by the Texas Higher Education Coordinating Board (THECB), it is assumed that the school will require the construction of a new building located in Kingsville with land already purchased by Texas A&M University-Kingsville(TAMUK) and financed by tuition revenue bonds. THECB estimates that construction of a 112,895 square foot pharmacy building would cost $26.6 million in tuition revenue bonds and be completed and ready for occupancy in May 2005. Debt service of $2,305,279 per year, beginning in fiscal year 2003, would be based on an assumed bond rate of 6 percent per year for 20 years. Operation and maintenance costs of $250,000 are included in the estimate of special item funding for fiscal year 2005. All other estimates of the number of full-time employees and of the costs of personnel, equipment, instruction, and other operating expenses mirror the program development, timeline, and appropriation and expenditure histories of the college of pharmacy at Texas Tech University Health Science Center at Amarillo (TTUHSC-A). It is assumed that TAMUK would initially receive $350,000 from the Legislature for the 2002-03 biennium to begin the curriculum design and accreditation process. The start-up funds also would allow TAMUK to hire a pharmacy educator to assist with curriculum and accreditation efforts and to help recruit a dean. In Fall 2005, four years after the initial appropriation, it is assumed that additional funds would need to be appropriated to hire faculty and staff, partially equip the building and enroll the first class of 65 Pharm.D students. Based on this timeline, the school would be eligible for formula funding for instruction and operation beginning in fiscal year 2008. Using the TTUHSC-A model, TAMUK would continue to receive special item funding for the college of pharmacy through fiscal year 2009. The estimated special item and formula funding costs (excluding debt service) are $350,000 with unexpended budget authority for the 2002-03 biennium, $2,000,000 in special item funding for 2004, $2,250,000 in special item funding for 2005, and $4,656,070 ($3,959,734 in special item funding; $696,336 in infrastructure formula funding) for fiscal year 2006. It is assumed that THECB would absorb the cost of preparing the impact statement. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 781 Texas Higher Education Coordinating Board, 710 The Texas A&M University System LBB Staff: JK, CT, DB