LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION April 20, 2009 TO: Honorable Dan Branch, Chair, House Committee on Higher Education FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB3940 by Villarreal (Relating to student loan repayment assistance for certain state employees.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB3940, As Introduced: a negative impact of ($985,841) through the biennium ending August 31, 2011.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION
April 20, 2009
TO: Honorable Dan Branch, Chair, House Committee on Higher Education FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB3940 by Villarreal (Relating to student loan repayment assistance for certain state employees.), As Introduced
TO: Honorable Dan Branch, Chair, House Committee on Higher Education
FROM: John S. O'Brien, Director, Legislative Budget Board
IN RE: HB3940 by Villarreal (Relating to student loan repayment assistance for certain state employees.), As Introduced
Honorable Dan Branch, Chair, House Committee on Higher Education
Honorable Dan Branch, Chair, House Committee on Higher Education
John S. O'Brien, Director, Legislative Budget Board
John S. O'Brien, Director, Legislative Budget Board
HB3940 by Villarreal (Relating to student loan repayment assistance for certain state employees.), As Introduced
HB3940 by Villarreal (Relating to student loan repayment assistance for certain state employees.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB3940, As Introduced: a negative impact of ($985,841) through the biennium ending August 31, 2011.
Estimated Two-year Net Impact to General Revenue Related Funds for HB3940, As Introduced: a negative impact of ($985,841) through the biennium ending August 31, 2011.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2010 ($17,710) 2011 ($968,131) 2012 ($1,405,957) 2013 ($1,906,957) 2014 ($2,456,957)
2010 ($17,710)
2011 ($968,131)
2012 ($1,405,957)
2013 ($1,906,957)
2014 ($2,456,957)
All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 2010 ($17,710) 2011 ($968,131) 2012 ($1,405,957) 2013 ($1,906,957) 2014 ($2,456,957)
Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 2010 ($17,710) 2011 ($968,131) 2012 ($1,405,957) 2013 ($1,906,957) 2014 ($2,456,957)
2010 ($17,710)
2011 ($968,131)
2012 ($1,405,957)
2013 ($1,906,957)
2014 ($2,456,957)
Fiscal Year Change in Number of State Employees from FY 2009 2010 0.0 2011 1.0 2012 1.0 2013 1.0 2014 1.0 Fiscal Analysis The bill would create a state employee loan repayment assistance program administered by the Higher Education Coordinating Board. The bill sets out certain criteria to receive loan repayment assistance as well as exceptions to the consecutive years of employment requirement. Under provisions of the bill, an eligible person can receive loan repayment assistance for up to five years. The board may provide repayment assistance for the repayment of any student loan for education at an institution of higher education or a private or independent institution of higher education in this state, including loans for undergraduate education, received by an eligible person through any lender. The total amount of repayment assistance distributed by the Board could not exceed the total amount of gifts and grants accepted by the board for repayment assistance, legislative appropriations for repayment assistance, and other funds available to the board for purposes of the program. Methodology The fiscal note will be split out between administrative costs and estimates on the loan repayment awards associated with the program.Administrative CostsThe Higher Education Coordinating Board has indicated that the only costs in fiscal year 2010 are $17,710 in technology costs for establishing the new program. In fiscal year 2011, they have indicated that they would need to hire one FTE, an administrative specialist, to implement the loan program. The total costs for this FTE, including salaries and benefits is $68,131 in fiscal year 2011 and $56,958 in fiscal year 2012 and subsequent years. Loan Repayment AwardsThe Higher Education Coordinating Board indicates the first cohort of applicants will receive loan repayment beginning in fiscal year 2011. Their estimate is based on graduated repayment award amounts to provide an incentive to hold state positions for five years as follows: $3,000 for 1st year, $4,000 for second year, $5,000 for third year, $6,000 for fourth year, and $7,000 for fifth year. They assumed that 300 state employees will receive loan repayment awards in the amount of $3,000 in fiscal year 2011. That same cohort will receive $4,000 awards in fiscal year 2012, plus an additional 50 new state employees receiving $3,000 awards. In fiscal year 2013, 300 third-year employees will receive $5,000, 50 second-year employees will receive $4,000, and 50 new employees will receive $3,000. In fiscal year 2014, 300 fourth-year employees will receive $6,000, while 50 third-year employees will receive $5,000, 50 second-year employees will receive $4,000, and 50 new employees will receive $3,000 in loan repayments. Based on these assumptions, the cost to the state for the loan repayment awards would be $0 in fiscal year 2010, $900,000 in fiscal year 2011, $1,350,000 in fiscal year 2012, $1,850,000 in fiscal year 2013 and $2,400,000 in fiscal year 2014. Their estimate is based on the assumption that the number of participants in the first five years of the program will be relatively small in comparison to the number of state agency positions or position vacancies. If the program proves to be successful, there may be future support for more funding that would allow for more loan repayment awards.
Fiscal Year Change in Number of State Employees from FY 2009 2010 0.0 2011 1.0 2012 1.0 2013 1.0 2014 1.0
2010 0.0
2011 1.0
2012 1.0
2013 1.0
2014 1.0
Fiscal Analysis
The bill would create a state employee loan repayment assistance program administered by the Higher Education Coordinating Board. The bill sets out certain criteria to receive loan repayment assistance as well as exceptions to the consecutive years of employment requirement. Under provisions of the bill, an eligible person can receive loan repayment assistance for up to five years. The board may provide repayment assistance for the repayment of any student loan for education at an institution of higher education or a private or independent institution of higher education in this state, including loans for undergraduate education, received by an eligible person through any lender. The total amount of repayment assistance distributed by the Board could not exceed the total amount of gifts and grants accepted by the board for repayment assistance, legislative appropriations for repayment assistance, and other funds available to the board for purposes of the program.
Methodology
The fiscal note will be split out between administrative costs and estimates on the loan repayment awards associated with the program.Administrative CostsThe Higher Education Coordinating Board has indicated that the only costs in fiscal year 2010 are $17,710 in technology costs for establishing the new program. In fiscal year 2011, they have indicated that they would need to hire one FTE, an administrative specialist, to implement the loan program. The total costs for this FTE, including salaries and benefits is $68,131 in fiscal year 2011 and $56,958 in fiscal year 2012 and subsequent years. Loan Repayment AwardsThe Higher Education Coordinating Board indicates the first cohort of applicants will receive loan repayment beginning in fiscal year 2011. Their estimate is based on graduated repayment award amounts to provide an incentive to hold state positions for five years as follows: $3,000 for 1st year, $4,000 for second year, $5,000 for third year, $6,000 for fourth year, and $7,000 for fifth year. They assumed that 300 state employees will receive loan repayment awards in the amount of $3,000 in fiscal year 2011. That same cohort will receive $4,000 awards in fiscal year 2012, plus an additional 50 new state employees receiving $3,000 awards. In fiscal year 2013, 300 third-year employees will receive $5,000, 50 second-year employees will receive $4,000, and 50 new employees will receive $3,000. In fiscal year 2014, 300 fourth-year employees will receive $6,000, while 50 third-year employees will receive $5,000, 50 second-year employees will receive $4,000, and 50 new employees will receive $3,000 in loan repayments. Based on these assumptions, the cost to the state for the loan repayment awards would be $0 in fiscal year 2010, $900,000 in fiscal year 2011, $1,350,000 in fiscal year 2012, $1,850,000 in fiscal year 2013 and $2,400,000 in fiscal year 2014. Their estimate is based on the assumption that the number of participants in the first five years of the program will be relatively small in comparison to the number of state agency positions or position vacancies. If the program proves to be successful, there may be future support for more funding that would allow for more loan repayment awards.
The fiscal note will be split out between administrative costs and estimates on the loan repayment awards associated with the program.Administrative CostsThe Higher Education Coordinating Board has indicated that the only costs in fiscal year 2010 are $17,710 in technology costs for establishing the new program. In fiscal year 2011, they have indicated that they would need to hire one FTE, an administrative specialist, to implement the loan program. The total costs for this FTE, including salaries and benefits is $68,131 in fiscal year 2011 and $56,958 in fiscal year 2012 and subsequent years. Loan Repayment AwardsThe Higher Education Coordinating Board indicates the first cohort of applicants will receive loan repayment beginning in fiscal year 2011. Their estimate is based on graduated repayment award amounts to provide an incentive to hold state positions for five years as follows: $3,000 for 1st year, $4,000 for second year, $5,000 for third year, $6,000 for fourth year, and $7,000 for fifth year. They assumed that 300 state employees will receive loan repayment awards in the amount of $3,000 in fiscal year 2011. That same cohort will receive $4,000 awards in fiscal year 2012, plus an additional 50 new state employees receiving $3,000 awards. In fiscal year 2013, 300 third-year employees will receive $5,000, 50 second-year employees will receive $4,000, and 50 new employees will receive $3,000. In fiscal year 2014, 300 fourth-year employees will receive $6,000, while 50 third-year employees will receive $5,000, 50 second-year employees will receive $4,000, and 50 new employees will receive $3,000 in loan repayments. Based on these assumptions, the cost to the state for the loan repayment awards would be $0 in fiscal year 2010, $900,000 in fiscal year 2011, $1,350,000 in fiscal year 2012, $1,850,000 in fiscal year 2013 and $2,400,000 in fiscal year 2014.
Their estimate is based on the assumption that the number of participants in the first five years of the program will be relatively small in comparison to the number of state agency positions or position vacancies. If the program proves to be successful, there may be future support for more funding that would allow for more loan repayment awards.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 781 Higher Education Coordinating Board
781 Higher Education Coordinating Board
LBB Staff: JOB, KK, RT, GO
JOB, KK, RT, GO