SB 0693 - Fiscal Note

Fiscal Note - SB 0693 - Establishes Missouri College Guarantee Program

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 3150-01

BILL NO. SB 693

SUBJECT: Education, Higher: College Guarantee Program

TYPE: Original

DATE: January 27, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Missouri College Guarantee	$0	$0	$0
General Revenue	$0	($76,503)	($30,505,212)
Gaming Commission	$0	$0	$0
Total Estimated Net Effect on All State Funds	$0	($76,503)	($30,505,212)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None	$0	$0	$0
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 6 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Elementary and Secondary Education (DESE) assume the proposal would result in no cost to DESE or school districts.

Officials from the University of Missouri assume the proposal would result in little or no fiscal impact on the university.

Officials from the Office of Administration and Gaming Commission assume the proposal would result in no fiscal impact to the agencies.

Officials from the State Treasurer's Office (STO) assume a new accounting fund would be created for the proposal. This would slightly increase the number of transactions that are processed through the accounting system. The STO would absorb the costs associated with increased transactions through its current appropriations.

Officials from the Coordinating Board For Higher Education (CBHE) assume that since the Missouri College Guarantee Program would not be active until the beginning of FY 2001, no fiscal impact would be realized until preparation for the implementation beginning in FY 2000. In order to provide timely information about the program to students, $25,000 would be necessary to print and distribute 100,000 brochures and letters about the program to high-school students and their parents. This would begin in FY 2000 to prepare for the following year's awards. An additional $2,000 would be necessary for application forms in FY 2000. These costs could potentially increase depending on the number of students who would be potential recipients. Postage costs, estimated at $4,000 for FY 2000 would also be subject to fluctuation based on the size of the program.

The Grant and Scholarship Program administrative staff is already small and working to capacity. Since the bill would create a program with a funding level that is likely to be 50-75% of what is currently administered for grants and scholarships by CBHE, a Senior Associate position at an estimated salary of $50,000 plus associated expense and equipment would be needed in FY 2000. The Senior Associate would be responsible for working with the Board to determine need calculations, to coordinate publicity and data collection, and to work with participating institutions in order to distribute funds accurately and smoothly.

In order to administer additional awards, CBHE officials assume an Administrative Assistant would also need to be hired at an estimated salary of $25,049 plus associated expense and

ASSUMPTION (continued)

equipment costs in FY 2000. In addition, about 50 hours of a programmer's time would be required to set up the initial database of applicants and recipients. This estimate assumes that the Board would use basically the same method for awarding scholarships as is currently used for the Charles Gallagher Grant program. If a significantly different method were prescribed, additional programming time would be needed. At $50 per hour in consulting fees, it would cost about $2,500 for initial programming. Subsequent maintenance of the new database could be accomplished with new and existing staff.

CBHE assumes one-time data processing costs would include $2,000 for imaging records and $4,000 for storage of computer records.

There would also be costs associated with the Missouri College Guarantee Board. While the bill would require the board to meet at least once a year, CBHE estimates three meetings per year. The travel and expense costs for this board would be estimated at $200 per board member per meeting for costs of $1,000 per meeting.

CBHE has no estimate for the amount of funds that would potentially be available in FY 2001 for distribution out of the Gaming Commission Fund for this program.

Consistent with CBHE's response to an identical proposal from the prior year, the Oversight Division has only included the administrative assistant in the fiscal impact.

Per the Office of Administration, Division of Budget and Planning, for the year ending June 30, 1998, estimated transfers into the Veterans' Homes Capital Improvement Trust Fund (the current fund receiving transfers from the Gaming Commission Fund until July 1, 2000) are expected to approximate $30.4 million. The Oversight Division has used the FY 1998 amount in the fiscal impact section as the FY 2001 unencumbered amount in the Gaming Commission Fund to be transferred into the Missouri College Guarantee Fund. In FY 2001 this would result in a loss to the General Revenue Fund and income to the Missouri College Guarantee Fund.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
MISSOURI COLLEGE GUARANTEE FUND
Income-Coordinating Board For Higher Education
Transfers in from the Gaming Commission Fund	0	0	$30,400,000
Cost-Coordinating Board For Higher Education
Scholarships	0	0	($30,400,000)
ESTIMATED NET EFFECT ON MISSOURI
COLLEGE GUARANTEE FUND	$0	$0	$0
GENERAL REVENUE FUND
Cost-Coordinating Board For Higher Education
Personal Service	$0	($26,317)	($26,975)
Fringe Benefits	0	(7,377)	(7,561)
Expense and Equipment	0	(42,809)	(35,338)
Total Cost-CBHE	0	($76,503)	($69,874)
Loss-General Revenue
Gaming Commission Fund Transfers	$0	$0	($30,400,000)
ESTIMATED NET EFFECT ON GENERAL
REVENUE FUND	$0	($76,503)	($30,505,212)
GAMING COMMISSION FUND
Savings-Gaming Commission
Transfers to General Revenue Fund	$0	$0	$30,400,000
Cost-Gaming Commission
Transfers to Missouri College Guarantee Fund	$0	$0	($30,400,000)
ESTIMATED NET EFFECT ON GAMING
COMMISSION FUND	$0	$0	$0
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(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 specify that gaming revenues for community neighborhood programs and gang-related violence be educational.

The proposal would require that beginning July 1, 2000, and each year thereafter the State Treasurer transfer any unencumbered moneys in the Gaming Commission Fund to the Missouri College Guarantee Fund. The Treasurer would make the transfer prior to making any other transfers from the fund.

The proposal would establish the Missouri College Guarantee Program to provide scholarships for attendance at colleges, universities, vocational or technical schools. The Coordinating Board for Higher Education would be the administrative agency for the implementation of the program.

The proposal would create the Missouri College Guarantee Board, which would meet at least annually.

The proposal sets eligibility requirements for the scholarships.

The amount of the scholarship would not exceed the current average cost of tuition and other fees and costs of books at the campus of the University of Missouri having the largest total enrollment. The scholarship would be based on financial need and reduced by other financial aid.

Beginning with the fall 2000 term scholarships would be awarded.

The proposal would create the Missouri College Guarantee Fund and moneys in the fund would be used solely for awarding scholarships.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Elementary and Secondary Education

Coordinating Board For Higher Education

Gaming Commission

Office of Administration

State Treasurer's Office

University of Missouri

Jeanne Jarrett, CPA

Director

January 27, 1998