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F I S C A L I M P A C T R E P O R T

SPONSOR Robinson

ORIGINAL DATE

LAST UPDATED

2/06/06

HB

SHORT TITLE Resident Tuition for Certain Students

SB 658

ANALYST Williams

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

Roughly $206.0 in FY09

and escalates over time;

see text

Recurring

General Fund -

Higher education

funding formula

Roughly $933.0 in FY09

and escalates over time;

see text

Recurring

General Fund -Cost of

tuition waiver (differ-

ence between resident

and non-resident tui-

tion for each student)

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

Roughly $410.0; see

text

Other State

Funds ---- insti-

tutional receipts

of tuition pay-

ments

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB77, which appropriates $50,000 to UNM to pay for an inter-American cooperation

and development program.

Relates to House Bill 2 funding for the University of New Mexico, research and public service

projects, Ibero-American education consortium and UNM instruction and general funding

SOURCES OF INFORMATION

LFC Files

Senate Bill 658 – Page

2

Responses Received From

Higher Education Department (HED)

University of New Mexico (UNM)

SUMMARY

Synopsis of Bill

Senate Bill 658 authorizes resident tuition and fees be charged to citizens of Mexico and other

Latin American countries participating in the Organization of American States educational por-

tal.

FISCAL IMPLICATIONS

The bill does not contain an appropriation; however, the general fund fiscal impact would have

two components: 1) general fund cost of student credit hours under the higher education funding

formula and 2) general fund cost of each student receiving a non-resident tuition waiver. The

number of new students who can be recruited under this program is not clear, but based on an

assumption of 100 new students, the potential general fund cost would be:

Preliminary estimated formula cost:

100 students

roughly $1,560 per semester or $3,120 per year

Total: $312,000

Less credits at about 33 percent

Total: $206,000

This general fund fiscal impact would not occur until at least FY09 due to the lag in the funding

formula. Further, the increase in general fund cost would occur only if institution is out of the

band on enrollment growth.

Estimated General Fund cost of waiver:

100 students

Resident tuition: $2,054 per semester

Non-resident tuition: $6,719 per semester

Difference: $4,665 per semester

General Fund cost: $466,500 *2 = $933,000

This general fund fiscal impact would not occur until at least FY09 due to the lag in the funding

formula.

Costs would be higher if these students are graduate students.

Note in the case of a non-resident tuition waiver, the general fund bears the burden of the differ-

ence between resident and non-resident tuition rates for every student (as is the case for all cur-

rent tuition waiver programs). This fiscal cost occurs because of the interpretation of the CHE

for similar statutory provisions offering non-resident tuition waivers contained within 21-1-3

NMSA 1978, such as Texas 135-mile, athletics and graduate assistants. All students attending a

post-secondary institution are also captured under the student credit hours reported for the higher

education funding formula.

Senate Bill 658 – Page

3

If these students began attending in Fall 2007, then UNM would receive an incremental $410.0

thousand of tuition revenue classified as other state funds.

OTHER SUBSTANTIVE ISSUES

HED notes: OASEP was launched in 1991 under the Inter-American Agency for Cooperation

and Development (IACD). The main objectives of the Portal are to promote new educational

methods, such as distance learning, and to disseminate training opportunities of high academic

quality. The portal promotes continuing education for students of all ages as well as the profes-

sional development of teachers, and to facilitate training and education of remote communities,

as well as traditionally underserved populations such as women and children, rural areas, indige-

nous communities and those with disabilities.

…the universities and institutions participating in the Portal may charge tuition and fees to regis-

ter in the courses themselves.

ALTERNATIVES

It should be noted this legislation extends a higher education entitlement program; thus, potential

cost would be driven by the number of qualified applicants each year. The legislature might

consider explicit language to authorize a specific amount of funding for qualified applicants as a

mechanism to cap annual costs. Then, the cap could be evaluated on the basis of the demand

and funding availability.

POSSIBLE QUESTIONS

1.

Under the provision of the legislation, is it the Legislature’s intent to authorize a non-

resident tuition waiver for the group identified in this bill, for which the general fund

bears the cost of the difference between resident and non-resident tuition for each eligible

student.

2.

Is there the possibility of establishing a tuition reciprocity agreement approach to achieve

the sponsor’s intent in which a cap on numbers of eligible students would be in place for

students coming to New Mexico and a cap on numbers of reciprocal eligible students for

New Mexico students to attend out-of-state institutions. (This is a more common ap-

proach to tuition waiver programs between states, and several existing New Mexico pro-

grams could serve as models.)

AW/yr