LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 79TH LEGISLATIVE REGULAR SESSION
 
April 11, 2005

TO:
Honorable Geanie Morrison, Chair, House Committee on Higher Education
 
FROM:
John S. O'Brien, Deputy Director, Legislative Budget Board
 
IN RE:
HB1736 by Brown, Fred (Relating to authorizing the issuance of revenue bonds for the College of Medicine of The Texas A&M University System Health Science Center.), As Introduced



Estimated Two-year Net Impact to General Revenue Related Funds for HB1736, As Introduced: a negative impact of ($6,985,600) through the biennium ending August 31, 2007.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2006 ($3,492,800)
2007 ($3,492,800)
2008 ($3,492,800)
2009 ($3,492,800)
2010 ($3,492,800)




Fiscal Year Probable (Cost) from
GENERAL REVENUE FUND
1
2006 ($3,492,800)
2007 ($3,492,800)
2008 ($3,492,800)
2009 ($3,492,800)
2010 ($3,492,800)

Fiscal Analysis

The bill amends Subchapter B, Chapter 55 of the Education Code by adding Section 55.1751 that would authorize The Texas A&M University System to issue additional revenue bonds in an amount not to exceed $40,000,000.  The debt service payments would be $3,492,800 in each year of the 2006-07 biennium.  The board of regents of The Texas A&M University System would acquire, purchase, construct, improve, renovate, enlarge, or equip property, buildings, structures, or other facilities, including roads and related infrastructure for educational facilities for the College of Medicine of The Texas A&M University System Health Science Center, with the proceeds of the bonds authorized in the subchapter.

 

In addition the bill states the board may pledge irrevocably all or any part of the revenue funds, including student tuition charges of The Texas A&M University System for payment of the bonds.  Furthermore, if funds are not available to meet the bond obligations authorized by this section, the section authorizes the board of regents to transfer funds among institutions, branches, and entities of The Texas A&M University System in an equitable manner to ensure each the most equitable and efficient allocation of available resources for each institution, branch, or entity to carry out its duties and purposes.

Although tuition income is pledged against the bonds, historically the Legislature has appropriated General Revenue to reimburse institutions for the tuition used to pay the debt service.  This note assumes the Legislature would continue this policy.


Methodology

The cost to issue the bonds is based on an assumed 20-year amortization, structured with level debt service with a 6% interest rate.  The debt service payments for fiscal year 2006 will be $3,492,800; for fiscal year 2007 will be $3,492,800; for fiscal year 2008 will be $3,492,800; for fiscal year 2009 will be $3,492,800; and for fiscal year 2010 will be $3,492,800.

Local Government Impact

No fiscal implication to units of local government is anticipated.


Source Agencies:
347 Public Finance Authority, 352 Bond Review Board, 710 Texas A&M University System Administrative and General Offices
LBB Staff:
JOB, CT, RT, MM