COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 3568-05
Bill No.: Perfected SCS for SB 1038
Subject: Education, Higher; Banks and Financial Institutions
Type: #Revised
Date: March 4, 2004
# Revised per Oversight Subcommittee Meeting March 4, 2004.
FISCAL SUMMARY
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| #General Revenue | $0 | ($20,640 to Unknown) | ($28,779 to Unknown) |
| Total Estimated
Net Effect on General Revenue Fund * |
$0 | ($20,640 to Unknown) | ($28,779 to Unknown) |
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Total Estimated
Net Effect on All State Funds |
$0 | $0 | $0 |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 8 pages.
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Local Government | $0 | $0 | $0 |
ASSUMPTIONS
Officials from the Office of the State Auditor (SAO) assume an audit of this program would require additional audit hours every year for ongoing review of the program and a semi-annual audit. SAO estimates one additional FTE would be needed for this program.
Oversight assumes SAO can complete the required program audit with existing resources.
In response to a previous version of the proposal, officials from the Office of Administration, Division of Budget and Planning, assumed this proposal would have no impact on their organization.
In response to a previous version of the proposal, officials from the Department of Higher Education
assumed the proposal would have no direct impact on their organization.
ASSUMPTIONS (continued)
Officials from the Office of the State Treasurer (STO) note that this proposal would allow direct deductions from state employees' pay to any number of bank and/or savings & loan deposit accounts. STO will defer to OA for an estimate of this cost.
The second portion of this bill would create a certificate of deposit tuition savings program. STO estimates the certificate of deposit tuition savings program would have the following fiscal impact to general revenues (each year assumes only a 25% growth):
FY 2005
$2.88 million tax loss
[$48 million estimated tax deductible contributions to the cd program * 6% Missouri tax rate = $2.88 million]
FY 2006
$3.6 million tax loss
[$60 million estimated tax deductible contributions to the cd program * 6% Missouri tax rate = $3.60 million]
FY 2007
$4.5 million tax loss
[$75 million estimated tax deductible contributions to the cd program * 6% Missouri tax rate = $4.50 million]
The above calculations are based on an estimate that 40,000 accounts will be opened during the first year with an average account size of $2,000.
Oversight assumes this proposal could result in more Missouri taxpayers investing in qualified education savings programs but is not able to estimate the rate of growth for this program. According to the website for the Federal Reserve Board the national savings rate for all households in 2000 was 1.3 percent, with a substantially increasing higher savings rate for households with higher incomes. Oversight will show the revenue impact of this proposal as a negative unknown.
ASSUMPTIONS (continued)
Officials from the Office of the Secretary of State (SOS) assume this proposal would create the Missouri Higher Education Deposit Program and the Missouri Higher Education Deposit Program Board to administer a program for tax free education savings deposits. The Director of the Division of Finance would be chairman of the board. In addition to the deposits, the board will develop and implement educational programs. The board of the Missouri Higher Education Deposit Program, the Department of Higher Education, and the Department of Revenue may promulgate rules to enact this legislation. SOS estimates these rules could require as many as 16 pages in the Code of State Regulations. These rules would be published in both the Missouri Register and Code of State Regulations. For any given rule, roughly half again as many pages are published in the Missouri Register as in the Code because cost statements, fiscal notes and the like are not repeated in Code. SOS indicated that the cost of a page in the Missouri Register is $23 and the cost of a page in the Code of State Regulations is $27. ((24 x $23)+(16 x $27) = $984)
Oversight assumes the SOS could absorb the costs of printing and distributing regulations related to this proposal. If multiple bills pass which require the printing and distribution of regulations at substantial costs, the SOS could request funding through the appropriation process. Any decisions to raise fees to defray costs would likely be made in subsequent fiscal years.
Officials from the Department of Revenue (DOR) assume Personal Tax would need to verify the documentation on each subtraction and handle additional correspondence. DOR estimates that Personal Tax will need one Tax Processing Tech for every 30,000 additional deductions claimed and one Tax Processing Tech for every 3,000 additional pieces of correspondence received on this legislation. DOR deferred to the estimated revenue impact prepared by the State Treasurers Office or the Office of Administration, Division of Budget and Planning. DOR estimated a total of two new FTE would be required, and provided an estimate of the total cost for their salaries, benefits, additional equipment and expense, and office space for the new staff.
ASSUMPTIONS (continued)
Oversight has, for fiscal note purposes only, changed the starting salary for the Tax Processing Technician to correspond to the second step above minimum for comparable positions in the state's merit system pay grid. This decision reflects a study of actual starting salaries for new state employees and the policy of the Oversight Subcommittee of the Joint Committee on Legislative Research. Oversight has also reduced the amounts for equipment and expenses in accordance with Office of Administration budget guidelines, and Oversight assumes that the limited number of new staff for this proposal could be accommodated in existing office space. If additional proposals requiring new staff are approved, the space needed for the new staff could be addressed under the normal state budget process.
Officials from the Office of Administration, Division of Accounting, and the Department of Economic Development, Division of Finance assume this proposal would not have a direct impact on their organizations.
In response to a previous version of the proposal, officials from the Department of Economic Development, Division of Credit Unions, and the State Highway Patrol, assumed the proposal would not have a direct impact on their organizations.
Officials from the Office of the Attorney General assumed that any additional cost resulting from this proposal could be absorbed with existing resources.
Officials from the Office of State Courts Administrator and the Office of State Public Defender assume that any additional costs resulting from this proposal would be addressed in future state budget requests.
Officials from the Department of Corrections assume this proposal would have no impact on their organization.
Officials from the Office of Prosecution Services and the Department of Public Safety did not respond to our request for information.
ASSUMPTIONS (continued)
# The Oversight Subcommittee met on March 4, 2004, and voted to reflect an unknown loss of revenue from this proposal beginning in FY 2006, and to reflect an administrative impact to the Department of Revenue of one-half FTE for FY 2006 and one FTE for FY 2007.
This proposal would decrease Total State Revenue.
| FISCAL IMPACT - State Government | FY 2005
(10 Mo.) |
FY 2006 | FY 2007 |
| GENERAL REVENUE FUND | |||
| # Loss - General Revenue | |||
| Reduced revenue due to higher contributions to IRC 529 programs. |
$0 |
(Unknown) |
(Unknown) |
| Total revenue reduction - GR | $0 | (Unknown) | (Unknown) |
| # Cost - Department of Revenue | |||
| Personal Service (0, 0.5, 1.0 FTE) | $0 | ($10,168) | ($20,844) |
| Fringe Benefits | $0 | ($3,599) | ($7,379) |
| Equipment and Expense | $0 | ($6,873) | ($556) |
| Total Costs - DOR | $0 | ($20,640) | ($28,779) |
| TOTAL ESTIMATED NET EFFECT ON GENERAL REVENUE |
$0 |
($20,640 to Unknown) | ($28,779 to Unknown) |
| FISCAL IMPACT - Local Government | FY 2005
(10 Mo.) |
FY 2006 | FY 2007 |
| $0 | $0 | $0 |
FISCAL IMPACT - Small Business
This proposal could have a fiscal impact to small businesses involved in investments or banking.
DESCRIPTION
This proposal would create the "Missouri Higher Education Deposit Program". Which would be overseen by the Missouri higher education savings program board, with the addition of a member having demonstrable experience and knowledge in banking or deposit investments. Additional provisions in the proposal address deferred payment advance fees, financial institution advertising, and security interests.
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
Office of the Attorney General
Office of the State Auditor
Office of the State Treasurer
Office of the Secretary of State
Office of State Courts Administrator
Office of State Public Defender
Office of Administration
Division of Budget and Planning
Division of Accounting
Department of Corrections
Department of Higher Education
Department of Revenue
Department of Economic Development
Division of Finance
Division of Credit Unions
State Highway Patrol
NOT RESPONDING
Office of Prosecution Services
Department of Public Safety
Mickey Wilson, CPA
Director
March 4, 2004