LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 2, 2001 TO: Honorable Robert Junell, Chair, House Committee on Appropriations FROM: John Keel, Director, Legislative Budget Board IN RE: HJR78 by Wilson (Proposing a constitutional amendment to provide an equitable distribution of the income from the permanent university fund for the support and maintenance of Prairie View A&M University.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HJR78, As Introduced: negative impact of $(80,000) 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 $(80,000) * * 2003 0 * * 2004 0 * * 2005 0 * * 2006 0 * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Probable * * Year Savings/(Cost) Revenue Revenue Revenue * * from General Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to * * Revenue Fund Univesity Texas A&M Prairie View * * 0001 ofTexas University A&M University * * Excellence Excellence Excellence * * Allocation Allocation Allocation * * 2002 $(80,000) $(71,574,000) $6,465,000 $65,109,000 * * 2003 0 (73,945,000) 7,865,000 66,080,000 * * 2004 0 (79,825,000) 8,524,000 71,300,000 * * 2005 0 (86,286,000) 9,442,000 76,884,000 * * 2006 0 (93,070,000) 10,340,000 82,730,000 * *************************************************************************** The table above reflects the change in the allocation from the Available University Fund. The distribution from the Permanent University Fund to the Available University Fund is unchanged. Fiscal Analysis If passed, the resolution would propose a constitutional amendment to change the distribution of the income from the Permanent University Fund (PUF) as it relates to the support and maintenance of Prairie View A&M University. Currently, the annual distribution of total return from the PUF goes to the Available University Fund (AUF) and is distributed two-thirds to the use of the University of Texas System (UTS) and one-third to the use of the Texas A&M System. Prairie View A&M University receives funding from the share directed to the Texas A&M System. The proposed amendment would institute a new allocation formula for the distribution from the AUF as follows: Prairie View A&M would no longer be funded from the Texas A&M System. Following debt service payments by the University of Texas System, 50 percent of the remainder would be allocated to the University of Texas System, and 50 percent would be allocated to Prairie View A&M. Methodology The new distribution of AUF was prepared by the Comptroller's office. The estimate is based on projected PUF total returns over the next five years, on projected payments for The University of Texas System and Texas A&M System PUF-authorized bonds, and on projected distributions to the two university systems and Prairie View A&M University over the next five years. The new distribution formula was applied to the five-year projections to arrive at the change in allocations. The Secretary of State estimates the cost to prepare, translate, and publish explanatory statement and send Spanish translation notice by mail and conduct an election for the proposed Constitutional amendment to be $80,000. Local Government Impact No significant fiscal implication to units of local government is anticipated. Source Agencies: 720 The University of Texas System, 715 Prairie View A&M University, 307 Secretary of State, 781 Texas Higher Education Coordinating Board, 304 Comptroller of Public Accounts LBB Staff: JK, SD, DB, HM