LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              March 18, 2001
  
  
          TO:  Honorable Irma Rangel, Chair, House Committee on Higher
               Education
  
        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 University--Kingsville.),
               As Introduced
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HB1640, As Introduced:  negative impact of $(4,960,558) 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                         $(2,655,279)  *
          *       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                             $(2,655,279) *
         *      2003                              (2,305,279) *
         *      2004                              (4,305,279) *
         *      2005                              (4,555,279) *
         *      2006                              (6,961,349) *
         *****************************************************
  
Fiscal Analysis
  
The bill requires 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 2002, 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