LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 79TH LEGISLATIVE REGULAR SESSION
 
April 15, 2005

TO:
Honorable Geanie Morrison, Chair, House Committee on Higher Education
 
FROM:
John S. O'Brien, Deputy Director, Legislative Budget Board
 
IN RE:
HB2004 by McClendon (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 HB2004, 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 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 $6,985,600 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, to construct a research building and to renovate the Joe H. Reynolds Medical Building 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.

 

While the Act does not specify issuance of tuition revenue bonds, Tuition Revenue Bonds are assumed to be issued in accordance with The Texas A&M University System revenue financing program.

 

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. 

 

Finally, this Act takes immediate effect if it receives a vote of two-thirds of all the members elected to both the House and the Senate as provided by Section 39, Article III, Texas Constitution. If the Act does not receive the vote necessary for immediate effect, the Act will take effect September 1, 2005.

Methodology

The cost to issue the bonds is based on an assumed 20-year level debt service amortization with a 6% interest rate.  The debt service payment for fiscal year 2006 would be $3,492,800; fiscal year 2007 would be $3,492,800; fiscal year 2008 would be $3,492,800; fiscal year 2009 would be $3,492,800; fiscal year 2010 would 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, 781 Higher Education Coordinating Board
LBB Staff:
JOB, CT, RT, MM