LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 3, 2001
TO: Honorable Irma Rangel, Chair, House Committee on Higher
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 Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB3469, As Introduced: negative impact of $(17,829,848) 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. *
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General Revenue-Related Funds, Five-Year Impact:
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* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(7,980,549) *
* 2003 (9,849,299) *
* 2004 (12,091,799) *
* 2005 (24,465,549) *
* 2006 (27,741,445) *
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All Funds, Five-Year Impact:
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*Fiscal Probable Probable Revenue Probable *
* Year Savings/(Cost) from Gain/(Loss) from New Savings/(Cost) from *
* General Revenue Fund General Revenue New General Revenue *
* 0001 Dedicated Dedicated *
* 2002 $(7,980,549) $7,980,549 $(7,980,549) *
* 2003 (9,849,299) 9,849,299 (9,849,299) *
* 2004 (12,091,799) 12,091,799 (12,091,799) *
* 2005 (24,465,549) 24,465,549 (24,465,549) *
* 2006 (27,741,445) 27,741,445 (27,741,445) *
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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 (Board) may prescribe
courses leading to degrees customarily offered by medical schools and
adopt rules on the school's operation and enrollment. The 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 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 General Revenue Fund account for the medical school will be held
separately and funds in the account will only be used for the school.
Funds in the account will include deposits from local exchange
companies, which represent excess switched access revenue as determined
by the Public Utility Commission of Texas.
Methodology
Based on analysis by the Texas Higher Education Coordinating Board
(THECB), it is assumed that:
(1) Implementation 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 the 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.
It is also assumed that all costs would be funded with General Revenue.
However, the deposits of excess switched access revenue may allay some or
all of the General Revenue costs of establishing and operating the
medical school.
THECB estimates that the construction of 21,050 square foot 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 2002, for 20 years. Both
buildings would be completed and ready for occupancy in March 2006.
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.
It is assumed that the university would initially receive $4,858,750 in
special item funding (excluding debt service) for the 2002-03 biennium to
begin the curriculum design and accreditation process and to hire key
personnel. 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 2006.
THECB estimates that the new school would require $5,606,250 in special
item funding (excluding debt service) for 2004 and $17,980,000 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 2008,
but would continue to receive special item funding through fiscal year
2011.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 781 Texas Higher Education Coordinating Board, 715
Prairie View A&M University, 710 The Texas A&M
University System, 473 Public Utility Commission
of Texas, 304 Comptroller of Public Accounts
LBB Staff: JK, CT, DB, HM