LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 78TH LEGISLATIVE REGULAR SESSION
  
 
May 9, 2003

TO:
Honorable Florence Shapiro, Chair, Senate Committee on Education
 
FROM:
John Keel, Director, Legislative Budget Board
 
IN RE:
HB1887 by Morrison (Relating to funds received by institutions of higher education to cover overhead expenses of conducting research.), As Engrossed



Estimated Two-year Net Impact to General Revenue Related Funds for HB1887, As Engrossed: a negative impact of ($86,431,916) through the biennium ending August 31, 2005.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2004 ($43,215,958)
2005 ($43,215,958)
2006 ($43,215,958)
2007 ($43,215,958)
2008 ($43,215,958)




Fiscal Year Probable Revenue Gain/(Loss) from
GENERAL REVENUE FUND
1
2004 ($43,215,958)
2005 ($43,215,958)
2006 ($43,215,958)
2007 ($43,215,958)
2008 ($43,215,958)

Fiscal Analysis

The bill would eliminate the use of indirect cost recovery generated by general academic institutions that is applied to the funding formulas in a way to reduce the General Revenue appropriations. Currently, 50% of the estimated indirect cost recovery that a general academic institution is projected to generate is applied as a method of finance for formula funding.


Methodology

The current estimate of indirect cost recovery that would be generated at general academic institutions for the 2004-05 biennium is $86,453,916 per year. The result of moving from 50% to 0% would result in $43,215,958 in indirect cost recovery each year being removed from the general academic funding formula. This fiscal note assumes the Legislature would increase General Revenue in the funding formula by a like amount.

This fiscal note assumes a constant level of indirect cost recovery would be generated in the out years.

To the extent that the legislature does not increase General Revenue to offset the reduction of indirect cost recovery in the funding formula, the formula rate would be reduced and the funding re-allocated.


Local Government Impact

No fiscal implication to units of local government is anticipated.


Source Agencies:
781 Higher Education Coordinating Board
LBB Staff:
JK, JO, CT, PF