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February 26, 2024 HB 24-1231
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24-0196
Rep. Young; Daugherty
Sen. Kirkmeyer; Mullica
Date:
Bill Status:
Fiscal Analyst:
February 26, 2024
House Health & Human Services
Matt Bishop | 303-866-4796
matt.bishop@coleg.gov
Bill Topic: STATE FUNDING FOR HIGHER EDUCATION PROJECTS
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☐ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill directs the State Treasurer to execute a lease-purchase agreement to fund
the certain capital construction projects. It makes a one-time transfer from the General
Fund in FY 2023-24, increases state revenue in FY 2024-25 only, and increases state
expenditures beginning in FY 2024-25.
Appropriation
Summary:
No appropriation is required.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
State Fiscal Impacts Under HB 24-1231
Current Year
FY 2023-24
Budget Year
FY 2024-25
Out Year
FY 2027-28
Revenue Cash Funds - $247.0 million -
Expenditures General Fund - - up to $17.5 million
Cash Funds - $247.0 million -
Transfers General Fund ($41.3 million) - -
Cash Funds $41.3 million
Other Budget Impacts GF Reserve - - up to $2.6 million
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February 26, 2024 HB 24-1231
Summary of Legislation
The bill directs the State Treasurer to execute a lease-purchase agreement of about $247 million
by October 31, 2024, to fund capital construction projects related to health care education. The
bill describes conditions for the issuance, including the limitation for annual state-funded
payments, which begin in FY 2027-28. The funds raised by the issuance will be used for:
construction of the College of Osteopathic Medicine at the University of Northern Colorado;
construction of the Health Institute Tower at Metropolitan State University of Denver;
construction of the Veterinary Health Education Complex at Colorado State University; and
renovation of the Valley Campus Main Building at Trinidad State College.
More information on these capital projects may be found here.
Senate Bill 22-056 authorized UNC to create a college and offer degrees in osteopathic
medicine. As a condition of accreditation, the university must retain funds in escrow that can be
used to reimburse students if the new program becomes unable to award degrees. The bill
creates the College of Osteopathic Medicine Escrow Money Cash Fund and transfers the
required amount to the new fund. When the money is released from escrow to the university,
the amount of state support it receives that fiscal year is reduced by the same amount.
Background
The state enters into lease-purchase agreements using financial instruments called certificates of
participation (COPs). In this type of lease-purchase agreement, the state transfers its interests in
a property to a lessor in exchange for cash and then leases the property back through annual
lease payments. The lessor assigns its interests to a trustee, usually a commercial bank, who
holds the title to the property, collects lease payments from the state, and makes payments to
the investors. The state renews the lease each year and makes annual payments authorized
through the Long Bill. The interest rate paid by the state is fixed and depends on market
conditions at the time COPs are priced for sale. When the lease ends, the state owns the facility
at no or minimal additional cost.
State Revenue
In FY 2024-25, the bill increases state revenue by $246,936,092 from issuance of the COPs.
Favorable market conditions may result in more revenue being received. The revenue generated
will be deposited in specific cash funds for state institutions of higher education. This revenue is
not subject to TABOR.
State Transfers
The bill transfers $41,250,000 from the General Fund to the College of Osteopathic Medicine
Escrow Money Cash Fund on June 30, 2024. Page 3
February 26, 2024 HB 24-1231
State Expenditures
The bill increases state expenditures for capital projects and for lease payments on the COP.
Capital projects. In FY 2024-25, state expenditures will increase in the Department of Higher
Education by the amount of revenue generated by the issuance, which is anticipated to be $247
million. The amount each department expects to expend is shown in Table 2 below. While these
expenditures are shown in FY 2024-25, funds may be spent over multiple fiscal years as is typical
of large capital projects.
Table 2
Expenditures Under HB 24-1231
FY 2024-25
University of Northern Colorado $127,542,028
Colorado State University $50,000,000
Metropolitan State University of Denver $50,000,000
Trinidad State College $19,394,064
Total Cost $246,936,092
For informational purposes, the total costs for the projects based on the institutions’ FY 2024-25
capital budget requests are shown in Table 3. State funds reflect the Capital Construction Fund,
which is typically funded by an annual transfer from the General Fund. Cash Funds represent
institutional revenue. Out-year costs not covered by the COP revenue will be addressed through
the annual budget process.
Table 3
Capital Project Costs
Fund
Source
FY 2024-25 FY 2025-26 FY 2026-27
University of Northern Colorado State Funds $126,266,608 - -
Cash Funds $1,275,420 - -
Colorado State University State Funds $25,000,000 $25,000,000 -
Cash Funds $74,999,991 $19,000,001 -
Metropolitan State University of
Denver
State Funds $8,960,824 $27,834,505 $16,330,081
Cash Funds - $5,903,479 -
Trinidad State College State Funds $6,337,816 $13,056,248 -
Cash Funds - - -
Total Cost $242,840,659 $90,794,233 $16,330,081
Total State Funds $166,565,248 $65,890,753 $16,330,081
Total Cash Funds $76,275,411 $24,903,480 - Page 4
February 26, 2024 HB 24-1231
Lease payments. The fiscal note assumes that payments on principal and interest, pursuant to
the lease-purchase agreement, will begin in FY 2027-28. The bill limits such payments to
$17.5 million.
Other Budget Impacts
General Fund reserve. Under current law, an amount equal to 15 percent of General Fund
appropriations must be set aside in the General Fund statutory reserve. Based on this fiscal note,
the bill is expected to increase the amount of General Fund held in reserve by the amounts
shown in Table 1, decreasing the amount of General Fund available for other purposes.
Effective Date
The bill takes effect upon signature of the Governor, or upon becoming law without his
signature.
State and Local Government Contacts
Governor Higher Education Legislative Department
Treasury
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit the General Assembly website.