Honorable John Zerwas, Chair, House Committee on Higher Education
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB3566 by Miller, Rick (Relating to tuition and fee exemptions at public institutions of higher education for certain military personnel and their dependents.), As Introduced
The fiscal implications of the bill cannot be estimated at this time, but it could result in General Revenue costs associated with the bill due to increased formula funding in fiscal years 2018-2020 and could result in a decrease in tuition and fee revenue each fiscal year from 2016-2020 for institutions of higher education. The bill could result in a net decrease in tuition and fee revenue each fiscal year due to the removal of the fixed point residency requirement expanding the number of eligible recipients combined with an assumed decrease in the eligible population due to additional residency and program requirements. The net change in the amount of waived tuition and fee revenue at institutions of higher education will depend on the number of individuals who would be newly eligible or ineligible for the exemption due to provisions of the bill.
The bill would amend the Education Code relating to tuition and fee exemptions for certain military personnel and their dependents. Tuition and fee exemptions in this section of the Education Code primarily provide awards for veterans; awards for children and spouses of certain deceased, disabled, or missing in action veterans; and awards through the Legacy Program by which a veteran assigns the exemption to an eligible child. The exemption applies to statutory tuition, designated tuition, and certain fees at public higher education institutions, including general academic institutions, health related institutions, public community/junior colleges, and other two year institutions.
The provisions of the bill would remove the fixed point residency requirement, which provides that a veteran must have entered the armed service in Texas, declared Texas as his or her home of record, or would have been considered to be a resident of Texas at the time of entry into the armed services. In place of the fixed point residency requirement, provisions of the bill would require that recipients of the exemption have resided in the state continuously for the eight years immediately preceding the first class date of the semester. In addition, provisions of the bill would clarify residency requirements for exemption recipients. Exemption recipients born in Texas would not be required to have resided in the state for eight years under provisions of the bill.
Provisions of the bill would increase the required length of service time for a veteran to qualify for the exemption from 180 days to 365 days. Provisions of the bill would prohibit individuals from receiving the exemption after the completion of one graduate degree, would limit the number of semester credit hours available for the exemption to 120 semester credit hours or the number of hours required to graduate with a specific degree, and would clarify that the exemption may only apply to formula funded semester credit hours. The bill would also provide that the exemption may only be used by individuals who do not receive state or federal grant aid dedicated to the payment of tuition and fees only or for those whose benefits are lower than the total amount of tuition and fees for that semester. In addition, all exemption recipient would be required to complete a Free Application for Federal Student Aid and a degree plan listing all courses required to graduate.
Provisions of the bill would require an individual receiving the exemption through the Legacy Program to be an undergraduate student and to exhaust any available benefits under the Montgomery GI Bill, if eligible.
Provisions of the bill would begin with tuition and fees during the fall 2015 academic semester. Students who received the exemption prior to the 2015-16 academic year continue to be eligible under the previous requirements of the exemption.
Under current law, it is estimated that the amount of waived tuition and fees from all exemptions to the different recipient types (veterans, spouses, dependents, and legacy) under this code during fiscal years 2016-2020 will be approximately $1.7 billion across all institutions of higher education. It is estimated the exemption would be provided to approximately 49,000 to 68,000 students from fiscal year 2016 to fiscal year 2020.
Based on analysis of information provided by the Texas Higher Education Coordinating Board (THECB), Texas Veterans Commission (TVC), The University of Texas System, Texas A&M University System, Texas State University System, University of North Texas System, University of Houston System, and Texas Tech University System, it is estimated that the provisions of the bill could result in an increase in the number of students receiving the exemption and, therefore, result in an increase in the amount of waived tuition and fees from the exemption during fiscal years 2016-2020. This increase in waived tuition and fees would be due primarily to the removal of the fixed point residency requirement. While this provision of the bill would result in an increase in waived tuition and fees, the amount of the increase could be partially or wholly offset due to the decline in eligible recipients from other provisions of the bill.
The predominate reduction in the waived tuition and fees would be due to the requirement that an individual reside in Texas continuously for the eight years preceding the academic semester. Other provisions of the bill such as increasing the service time for the veteran and limiting the Legacy Program to only eligible undergraduate students are also assumed to offset the increased waived tuition and fees due to the bill.
The net change in the amount of waived tuition and fee revenue at institutions of higher education would depend on the number of individuals who would be newly eligible or ineligible for the exemption due to provisions of the bill and choose to attend or leave an institution of higher education in Texas. However, for the purpose of this fiscal note, it is assumed that there would likely be an increase in the number of students accessing the exemption.
It is assumed that provisions of the bill could result in additional costs in General Revenue from increased formula funding for institutions of higher education due to additional students choosing to attend institutions of higher education because of the receipt of the exemption. This cost would not be seen until fiscal year 2018, as formula funding is provided to institutions based on student data prior to the biennium that will be funded. As such, formula funding in fiscal years 2016 and 2017 will be based on students that are enrolled during fiscal year 2015.
Based on information provided by TVC, there are approximately 1.7 million veterans residing in Texas. However, the number of veterans that were not previously eligible for the exemption who would now meet the new residency requirements under the bill, be otherwise eligible for the exemption, and choose to attend higher education in Texas, are unknown. Consequently, the fiscal impact to the state in increased formula costs and to institutions of higher education in waived tuition and fee revenue cannot be estimated.
Based on an analysis of information provided by TVC and THECB, it is assumed that any costs to THECB or TVC associated with the bill could be absorbed within the agency's existing resources. Based on an analysis of information provided by institutions of higher education, it is assumed any administrative costs associated with implementing provisions of the bill could be absorbed by the institutions.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies:
403 Veterans Commission, 710 Texas A&M University System Administrative and General Offices, 720 The University of Texas System Administration, 758 Texas State University System, 768 Texas Tech University System Administration, 769 University of North Texas System Administration, 781 Higher Education Coordinating Board, 783 University of Houston System Administration