LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session May 11, 2001 TO: Honorable Teel Bivins, Chair, Senate Committee on Education FROM: John Keel, Director, Legislative Budget Board IN RE: HB3469 by McClendon (Relating to establishing a medical school at Prairie View A&M University.), As Engrossed ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB3469, As Engrossed: negative impact of $(500,000) 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 $(500,000) * * 2003 0 * * 2004 (1,495,000) * * 2005 (9,849,299) * * 2006 (12,091,799) * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Savings/(Cost) from * * General Revenue Fund * * 0001 * * 2002 $(500,000) * * 2003 0 * * 2004 (1,495,000) * * 2005 (9,849,299) * * 2006 (12,091,799) * ***************************************************** Technology Impact Creation of a new medical school will require a significant investment in technology, both for instructional and administrative purposes. Fiscal Analysis The bill establishes a medical school at Prairie View A&M University. The Texas A&M University System Board of Regents (TAMU Board) may prescribe courses leading to degrees customarily offered by medical schools and adopt rules on the school's operation and enrollment. The TAMU Board may provide training and teaching of medical students, medical technicians and other technicians in the practice of medicine. In the operation of the school, the TAMU Board may enter into affiliation or coordinating agreements with other entities or institutions, and may accept grants or gifts from public or private entities. The TAMU Board shall develop a plan for establishing the school, take necessary steps to establish it not later than January 1, 2007, and begin admitting students not later than the fall semester of 2008. Methodology Based on analysis by the Texas Higher Education Coordinating Board (THECB), it is assumed: 1) Implementation will be made with moderate costs and maximum use of existing resources and in-kind contributions from clinical partners; 2) The medical school would offer no new health-related degree programs other than the doctor of medicine degree in its first ten years of operation; (3) The medical technology degree program that is currently offered at Prairie View A&M University would continue to be supported by funding formulas for general academic institutions; and (4) The medical school would require the construction of two new buildings -- a medical library and a medical education building --located on or adjacent to the Prairie View A&M University campus with land purchased by the University and financed by tuition revenue bonds. THECB estimates that the construction of 21,050 square foot library building would cost $4.6 million and a 281,300 square foot medical education building would cost $70.3 million. Facility space requirements are based on existing medical facilities at Texas A&M University System Health Science Center and other medical schools. Combined debt service for the two buildings of $6,485,549 would be based on an assumed bond rate of 6 percent per year, beginning in fiscal year 2005, for 20 years. Both buildings would be completed and ready for occupancy in March 2008. All other estimates of the number of full-time employees and of the costs of personnel, equipment, instruction and other operating expenses are based on the program development, timeline and expenditure histories of the medical school at Texas A&M University System Health Science Center and other medical schools in Texas. THECB estimated that the TAMU Board would initially receive $500,000 in 2002 (with unexpended budget authority in 2003) to complete the developmental plan. Start-up funds would increase as new personnel are hired, the buildings are completed and equipped, library materials are purchased, and each class of 65 students is admitted, beginning in fall 2008. The THECB estimates that the new school would require $1,495,000 in special item funding for 2004 and $3,363,750 in special item funding (excluding debt service) for 2005. Based on this timeline, the school would be eligible to start receiving instruction and operations and infrastructure formula funding in 2010. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 715 Prairie View A&M University, 781 Texas Higher Education Coordinating Board LBB Staff: JK, CT, DB, HM