Fiscal Note - SB 0287 - Challenge Scholarship Program
L.R. NO. 1139-04
BILL NO. SCS For SB 287
SUBJECT: Education, Higher: Scholarships
TYPE: Original
DATE: February 14, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue ($2,010,327) ($41,985,359) ($60,643,411)
Total Estimated
Net Effect on All
State Funds ($2,010,327) ($41,985,359) ($60,643,411)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
None $0 $0 $0
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
Assumptions from Southwest Missouri State University, Moberly Area Community
College, Jefferson College, Northwest Missouri State University, Missouri
Southern State College, Three Rivers Community College, Central Missouri
State University, East Central College, Harris-Stowe State College, Truman
State College, Missouri Western State College, Linn State Technical College
and Department of Elementary and Secondary Education were based on responses
to the previous version of the proposal.
Officials from Southwest Missouri State University assume the proposal would
result in costs related to programmer time of approximately $1,600 annually,
postage of approximately $3,500 annually, and forms of approximately $200
annually, for a total cost of approximately $5,300 annually.
Officials from Moberly Area Community College assume the proposal would
result in costs of approximately $1,500 annually for personnel and
operations.
Officials from Jefferson College assume the proposal would result in annual
costs of approximately $5,000 annually for supplies, computer reports, new
programs and clerical personnel (.2 FTE).
Officials from Northwest Missouri State University assume the proposal would
result in approximately $6,000 in annual costs for computer programming,
supplies and mailing.
Missouri Southern State College assume they could accomplish the provisions
of the proposal by using current reports and systems, resulting in no fiscal
impact.
Officials from Three Rivers Community College assume the proposal would
result in a positive impact on enrollment as students who might otherwise
attend a 4-year university decide to attend the college. From an
administrative standpoint they anticipate an increase in paperwork to verify
enrollment for all students who are Missouri residents.
Officials from Central Missouri State University, East Central College,
Harris-Stowe State College, Truman State College, Missouri Western State
College and Linn State Technical College assume the proposal would result in
no fiscal impact.
The Oversight Division assumes the colleges and universities could accomplish
the provisions of the proposal with existing resources.
Officials from the Department of Elementary and Secondary Education assume
the proposal should not affect the Outstanding Schools Trust Fund as long as
the federal tax deduction is not affected.
Officials from the Office of Administration-Budget and Planning assume the
proposal would result in General Revenue Fund losses of $21.1 million in FY
1999, $45.5 million in FY 2000 and $75.6 million in FY 2001, assuming
scholarships would be taken on tax returns subsequent to the year they were
earned. Based on the CBHE response, Oversight assumes these amounts are for
calendar years.
Officials from the Department of Corrections assume the proposal would have
no fiscal impact on them.
Officials from the Coordinating Board For Higher Education (CBHE) state that
based on conversations with several institutions of higher education in
Missouri, an assumption was made about the average number of hours in which
students are enrolled. For two- year schools the average is assumed to be
nine hours per semester, for four-year schools and proprietary schools the
average is assumed to be fifteen hours per semester. This calculation also
assumes a 75% freshman to sophomore retention rate for all three relevant
years. This calculation also assumes a 10% growth rate in enrollment over
1995 levels for each of the three relevant years. Statistical information
for this calculation was obtained from the Missouri Higher Education
1995-1996 Statistical Summary, and the Directory and Statistical Summary:
Proprietary Sector of Missouri Postsecondary Education, 1994-95.
CBHE officials assume the Senior Associate ($50,000) and Research Associate
($40,000) would develop an education campaign for the Challenge Scholarship
Program, respond to citizen requests for information, coordinate the
implementation of the program on the various campuses, and implement new
monitoring and data collection activities for the program. An administrative
assistant FTE ($20,277) would support the new and existing personnel in grant
and scholarship administration.
The Oversight Division assumes that the proposal requires the CBHE to provide
a list of eligible institutions to DOR, receive a report of scholarships from
DOR and prescribe rules and regulations. Oversight assumes CBHE could
provide the list to DOR and prescribe rules and regulations with existing
resources. Oversight assumes the administrative assistant included by CBHE
could assist existing staff and maintain the data of scholarships received by
DOR. Therefore, the Oversight Division has only included the administrative
assistant in the fiscal impact for CBHE.
CBHE officials assume that on a calendar year basis, the scholarship amounts
earned would be $21,146,345 in 1998, $45,531,769 in 1999 and $75,619,950 in
2000.
Officials from the Department of Revenue (DOR) assume the legislation would
require modifications to the income tax system, tax forms and increased data
entry requirements. The system modifications and tax form revisions would be
completed by existing staff and resources. The Information Systems Division
would need two Data Entry Operator IIs ($16,488 annual salary) for four
months of each tax processing to key enter the additional income tax data
needed for this reimbursement. The Division of Taxation would be responsible
for receiving the challenge scholarship reimbursement vouchers from an
eligible higher institution of learning. These vouchers would then be
processed on a remittance processor and down loaded to a personal computer
system. The information from the vouchers could then be matched against the
income tax system to verify the amount of reimbursement claimed on a
taxpayer's income tax return. The Division of Taxation would need one Clerk
II ($15,372 annual salary) for six months of each processing tax year to
batch, run and data correct challenge scholarship reimbursement vouchers.
One Tax Processing Technician II ($16,488 annual salary) would be needed for
each tax processing year to handle error corrections, telephone inquiries and
correspondence. One End-User Computing (EUC) Programmer ($26,544 annual
salary) would be needed for six months to create, test and implement the new
programs needed for the remittance processor. Because the additional
personnel would be hired for the tax season only, DOR officials assume no
additional costs for expense and equipment would be needed.
The Oversight Division estimates a loss to General Revenue of $1,982,628 for
FY 98 due to the possibility of reduced withholding and estimated income tax
payments for five months of calendar year 1998 (January through May, 1998),
since the proposal is effective for education credits earned after January 1,
1998. Oversight assumes 25% of eligible taxpayers would adjust their tax
payments in FY 98; however, this amount could be less, depending on
taxpayers' awareness of the new credit and their desire to adjust tax
withholdings or estimated tax payments. In FY 1999 and 2000 Oversight has
assumed taxpayers would use 100% of eligible scholarships in withholdings and
estimated tax payments.
The proposal would result in a decrease in Total State Revenues since income
tax collections are included in the calculation of Total State Revenue.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
GENERAL REVENUE FUND
Cost-Coordinating Board For Higher Education
Personal Service (1 FTE) ($17,313) ($21,304) ($21,837)
Fringe Benefits (4,939) (6,078) (6,230)
Expense and Equipment (5,447) (309) (318)
Total Cost-CBHE ($27,699) ($27,691) ($28,385)
Cost-Department of Revenue
Personal Service (2.25 FTE) $0 ($21,837) ($30,472)
Fringe Benefits 0 (6,230) (8,694)
Total Cost-DOR $0 ($28,067) ($39,166)
Loss to General Revenue Fund
Challenge Scholarship Program ($1,982,628) ($41,929,601) ($60,575,860)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND ($2,010,327) ($41,985,359) ($60,643,411)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
0 0 0
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of
this proposal.
DESCRIPTION
The proposal would create the Challenge Scholarship Program. The scholarship
would be claimed on individual income tax returns for credit hours completed.
The proposal would establish student eligibility requirements.
For calendar year 1998, the maximum allowable scholarship would be $500, for
the year 1999 the maximum would be $1,000, and for the year 2000 the maximum
would be
$1,500.
Every eligible educational institution would furnish the students a form
prescribed by DOR showing the credit hours completed by the student for the
calendar year. Claims for the scholarship would be filed with DOR by
December 31 of the succeeding year. Challenge scholarship claims could only
be filed for the calendar years beginning on or after January 1, 1998. The
proposal would only apply to credit hours accrued after January 1, 1998.
This legislation is not federally mandated, would not duplicate any other
program, would not require additional capital improvements or rental space,
and would affect total state revenue.
SOURCES OF INFORMATION
Coordinating Board For Higher Education
Department of Revenue
Office of Administration
Department of Elementary and Secondary Education
Southwest Missouri State University
Central Missouri State University
Northwest Missouri State University
Truman State University
Missouri Southern State College
Missouri Western State College
Harris-Stowe State College
Jefferson College
Moberly Area Community College
East Central College
Three Rivers Community College
Linn State Technical College
NOT RESPONDING: University of Missouri, State Fair Community College,
Southeast Missouri State University, Lincoln University, North Central
Missouri College, Crowder College, St. Charles County Community College, St.
Louis Community College
This Fiscal Note is not an official copy and should not be quoted or cited.