LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 27, 2001 TO: Honorable Teel Bivins, Chair, Senate Committee on Education FROM: John Keel, Director, Legislative Budget Board IN RE: SB1465 by Bivins (Relating to the operation, regulation, and administration of public institutions of higher education.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB1465, As Introduced: negative impact of $(720,000) 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 $(360,000) * * 2003 (360,000) * * 2004 (767,025) * * 2005 (767,025) * * 2006 (767,025) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Savings/(Cost) from Probable Revenue Gain/(Loss) * * Year General Revenue Fund from Estimated Other * * 0001 Educational and General Income * * Account/ GR-Dedicated * * 0770 * * 2002 $(360,000) $(360,000) * * 2003 (360,000) (360,000) * * 2004 (767,025) (360,000) * * 2005 (767,025) (360,000) * * 2006 (767,025) (360,000) * *************************************************************************** Fiscal Analysis The bill exempts higher education institutions (institutions) from several State regulations or requirements. Institutions would be exempted from certain state purchasing regulations. Institutions would be exempted from leave and holiday regulations. Institutional employee leave provisions would be amended to allow institutions to combine vacation leave, sick leave and holidays. Institutions would be required to enter into a memorandum of understanding with the Teacher Retirement System of Texas, the Employees Retirement System of Texas, and the Texas Higher Education Coordinating Board concerning awards of accrued leave or other related issues. The bill would authorize institutions to grant merit salary increases, including one-time merit payments. The bill would authorize institutions to pay employees with multiple appointments for working more than 40 hours a week in lieu of compensatory time. The bill would authorize institutions to employ a person who has retired from state government. The bill would allow institutions to notify employees by use of electronic media. The bill would authorize institutions to pay employees for the accrued balance of the employee's vacation time even if the employee is re-employed by the state within 30 days of separation. The bill would authorize institutions to reduce employees salary for parking and would eliminate the provision that these funds be used only for employee parking facilities. In addition, the bill would allow institutions to reduce employees' salary for club memberships, recreational sport membership or similar programs. The bill would authorize institutions to exempt full-time employees from tuition and fees. The bill would exempt institutions from interest on overdue payment equal to or less than $5. This bill would simplify reporting requirements for institutions, and it would eliminate the requirement that certain institutions secure the opinion of the Attorney General on the conveyance of title of any real property given to those institutions. Institutions would be exempted from strategic planning requirements. This bill would authorize institutions to charge a credit card user a processing fee. Methodology Article 1 of this bill would partially implement recommendation ED-4 from the Comptroller's report, e-Texas: Smaller, Smarter, Faster Government. This portion of the bill would simplify and deregulate the procurement process at institutions of higher education. Although institutions could save money under the bill's provisions, it is assumed any funds saved through greater efficiencies would be retained by the institutions for use elsewhere, resulting in no significant fiscal impact on the State. The provisions of the bill addressing leave, merit salary increases, and hiring retirees could have an effect on the budgets of institutions of higher education, as well as on the State's retirement systems. Additional information from the institutions is needed to determine the potential cost for these provisions. The provision allowing institutions to exempt employees from some or all of tuition or fees could result in a loss of tuition income or dedicated general revenue accounts. There are approximately 100,000 full-time equivalent institutional employees. Based on Texas Higher Education Coordinating Board analysis, it is assumed that two percent of eligible employees would take advantage of this benefit each year, and each would take two 3-credit hour classes per year, for which the base tuition is $240. The estimated reduction in tuition revenue is estimated to be $360,000 each year. It is assumed that the general revenue would be needed to reimburse institutions for the loss of tuition income. In addition, it is assumed that half of these students would not otherwise enroll, resulting in additional formula funding costs. Since formula funding is based upon historical enrollment, the general revenue costs would not be incurred until fiscal year 2004 and are estimated to be $407,025 for fiscal year 2004 and each fiscal year subsequent. Institutions could also realize a reduction in non-appropriated tuition revenue. However, these amounts would not impact State appropriations. Simplifying reporting requirements of universities could reduce administrative costs. It is assumed that any funds saved through greater efficiencies would be retained by the institutions for use elsewhere, resulting in no significant fiscal impact on the State. Allowing institutions of higher education to charge a convenience fee to students using a credit card to pay for tuition, fees and other charges would increase revenues to the institutions. However, these fees would be auxiliary in nature and would not impact State appropriations. Local Government Impact General revenue would not be used to offset the loss of tuition and fee revenue for employees at community colleges, resulting in a potential revenue reduction for community colleges. Source Agencies: 308 State Auditor's Office, 327 Employees Retirement System, 304 Comptroller of Public Accounts LBB Staff: JK, CT, DB