81(R) HB 21 - Introduced version

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2010	$0
2011	$0
2012	$0
2013	$0
2014	$0

Fiscal Year	Probable Revenue (Loss) from Institutional Funds 997
2010	$0
2011	$0
2012	($18,534,214)
2013	($43,186,820)
2014	($72,369,053)

Under provisions of the bill, the tuition rate charged to a first-time entering student will remain at the same rate for four years for students attending general academic teaching institutions and two years for students attending a public junior college. The change in tuition rate will go into effect fall 2010 (fiscal year 2011) and the first benefit will be felt by the fall 2010 entering class when they return Fall 2011 (fiscal year 2012). As a result the fiscal impact of the bill will begin with fiscal year 2012.

The bill would change tuition rates charged under Sections 54.051 and 54.0513 of the Education Code by institutions of higher education. Currently Section 54.051 sets a minimum on how much tuition a community college can charge a resident student. Under Section 54.0513, the governing board of an institution of higher education may charge any student an amount designated as tuition that the govering board considers necessary for the effective operation of the institution. This amount is in addition to any other tuition amounts, including amounts under Section 54.051, that the institution is authorized to charge. For purposes of this fiscal note, the tuition will be considered institutional funds.

Based on tuition information reported to them by institutions, the Higher Education Coordinating Board determined that designated tuition rates (Section 54.0513 of the Education Code) at general academic teaching institutions have increased, on average, by 14% per year for the past 3 years (average of 11.10%, 13.30, and 17.86). However, the Higher Education Coordinating Board believes the rate of increase will slow to about 8.45% (60% of the current rate of increase). The Higher Education Coordinating Board applied the 8.45% increase to the fiscal year 2009 estimated tuition rates and derived estimates for fiscal year 2009-14. During that time, the Higher Education Coordinating Board estimated that designated tuition at general academic teaching institutions would increase from $2,885 in fiscal year 2009 to $4,328 in fiscal year 2014.

In fall 2007, the number of full-time student equivalent (FTSE) resident, freshmen enrolled in general academic teaching institutions was 56,722. The first-time entering freshman retention rate for universities was 86.70%. The Higher Education Coordinating Board multiplied the numbers of freshmen equivalents by the retention rates to derive the number of students impacted by the provisions.

The Higher Education Coordinating Board assumed the retention rates decreased by 8% each year and made the same calculation for each year. In order to derive the amount of tuition revenues lost by the schools they multiplied the number of FTSE freshmen by the persistence rate and the result of that calculation by the change in designated tuition each student would have paid if rates were held constant for each cohort. They subtracted the amount of constant designated tuition from the anticipated amount of designated tuition (without regulation). The Higher Education Coordinating Board then multiplied the estimated number of FTSE for each year by the difference calculated above.

Based on these assumptions, the general academic teaching institutions would see a decrease in designated tuition revenue of approximately $14.1 million (49,178 students multiplied by $287) in fiscal year 2012. The losses in designated tuition revenue would increase in the remaining years as new cohorts of freshmen enter the institutions.

For the tuition rates (Section 54.051 of the Education Code) at community colleges the Higher Education Coordinating Board determined the tuition increased from $1,300 in fiscal year 2009 to $1,864 in fiscal year 2014 assuming a 7.47% increase per year. During that time, they estimated that tuition at public junior colleges would increase from $1,300 in fiscal year 2009 to $1,864 in fiscal year 2014. In fall 2007 the full-time student equivalent number of resident, freshmen enrolled in public junior colleges was 66,996. The first-time entering freshman retention rate for public junior colleges was 59%. The Higher Education Coordinating Board multiplied the numbers of freshmen equivalents by the retention rates to derive the number of students impacted by the provisions.

In order to derive the amount of tuition revenues lost by the schools they multiplied the number of FTSE freshmen by the persistence rate and the result of that calculation by the change in tuition each student would have paid if rates were held constant for each cohort. They subtracted the amount of constant tuition from the anticipated amount of tuition (without regulation). The Higher Education Coordinating Board then multiplied the estimated number of FTSE for each year by the difference calculated above. Based on these assumptions, the public junior colleges would see a decrease in tuition revenue of approximately $4.4 million (39,528 students multiplied by $112) in fiscal year 2012. The losses in tuition revenue would increase in the remaining years as new cohorts of freshmen enter the institutions.

Based on these calculations the total decrease in tuition revenue would be $18.5 million in fiscal year 2012 with increases in the remaining years.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION


April 13, 2009

TO:	Honorable Dan Branch, Chair, House Committee on Higher Education

FROM:	John S. O'Brien, Director, Legislative Budget Board

IN RE:	HB21 by Leibowitz (Relating to a fixed tuition rate provided by general academic teaching institutions and public lower-division institutions of higher education to certain undergraduate students.), As Introduced