LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 940 HLS 24RS 1912
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: June 3, 2024 3:03 PM Author: TURNER
Dept./Agy.: University Systems/Division of Administration/Treasury
Subject: Appropriation debt authority for HIED capital projects Analyst: Deborah Vivien
BONDS EN INCREASE GF EX See Note Page 1 of 2
Authorizes the issuance of bonds to finance deferred maintenance projects included in the College and University Deferred
Maintenance and Capital Improvement Program
Proposed law creates the College and University Deferred Maintenance and Capital Improvement Program that authorizes $2B in
appropriation dependent debt for deferred maintenance and other capital improvement needs on higher education campuses, with each
system receiving a specific amount (no specified projects). The bond authorization is subject to State Bond Commission approval. The
projects will not be subject to the Capital Outlay priority process but will require DOA then JLCB approval prior to CEA execution and be
appropriated from the College and University Deferred Maintenance and Capital Improvement Fund created in the bill. The bill contains no
identified revenue source for debt service. Debt may not be issued until July 1, 2026, and must have an appropriation, presumably of
either debt service or bond proceeds. Lease agreements within the financing structure and debt terms may not exceed 30 years. Bond
proceeds will be appropriated through the College and University Deferred Maintenance and Capital Improvement Fund created in the bill,
which can accept cash for the same purpose. Nonprofit corporations, members of which are not specified, may be established for
financing. Facility Planning & Control will manage the projects and may retain 1% of project costs. Public bid law will be followed. The
Division will approve any CEAs between the corporation, boards and the state. Projects under $1M may be approved solely by the board.
EXPENDITURES 2024-25 2025-26 2026-27 2027-28 2028-29 5 -YEAR TOTAL
State Gen. Fd. SEE BELOW SEE BELOW SEE BELOW SEE BELOW SEE BELOW
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other SEE BELOW SEE BELOW SEE BELOW SEE BELOW SEE BELOW
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total
REVENUES 2024-25 2025-26 2026-27 2027-28 2028-29 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 $0 $0 $0 $0 $0
EXPENDITURE EXPLANATION
Proposed law authorizes bonds to be issued after approval of the State Bond Commission either as one approval or in
increments, after an appropriation is adopted, though it is not clear if this appropriation is for debt service or bond proceeds.
It appears that the bill allows authorization of a bond sale without a specified revenue stream, which indicates SGF will pay
the debt service beginning as early as FY 25 (no debt to be issued after FY 36 with payment as late as FY 66) should debt be
issued. No source of cash funding is identified in the bill. The projects will forego the Capital Outlay priority process and
require the approval of the Commissioner and then JLCB. The timing of the bond sales is uncertain. It is presumed that the
nonprofit corporation(s), which can be an LLC with one non-profit member, will determine timing and magnitude of bond
sales for each board. The fiscal note assumes that at least $100,000 in debt service will be due in FY 27, which is the basis
for a dual referral recommendation.
Facility Planning and Control (FP&C) will administer the projects and will require additional staffing and related
equipment totaling about $650,000 in SGF annually beginning as early as FY 27 since the first issuance of bonds
may be authorized upon appropriation. The bill has no identified revenue source but, once funded, allows FP&C
to retain 1% of project costs (assumed to be statutory dedication through the newly created fund) for
administrative efforts. Certain administrative costs are not typically an eligible expense for tax-exempt bond proceeds.
Estimated administrative costs include related personnel expenses for the following new positions (with a slight increase in
year 1 for equipment and supplies): two project managers ($150,000), two fiscal analysts ($115,000) and one
Administrative Program Manager ($95,000) per FP&C.
Capital outlay bonds for deferred maintenance projects have historically been issued as general obligation debt, debt service
of which is not appropriated. However, Act 360 of 13RS and Act 391 of 07RS each specified certain LCTCS projects that were
funded with appropriation dependent debt, in a manner similar to this bill. Act 360 debt service is currently paid with SGF in
Schedule 20-930 of the state operating budget. The proposed legislation does not contain a project list but allows each
system a specified amount of bonding authority for a total of $2.0 B: LSU System = $1,071 M, Southern University System
= $153 M, University of Louisiana System = $523 M, and LA Community and Technical College System = $253 M.
CONTINUED ON PAGE TWO
REVENUE EXPLANATION
There is no anticipated direct material effect on governmental revenues as a result of this measure.
Senate Dual Referral Rules House
x 13.5.1 >= $100,000 Annual Fiscal Cost {S & H} x 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
13.5.2 >= $500,000 Annual Tax or Fee Alan M. Boxberger
6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} or a Net Fee Decrease {S} Legislative Fiscal Officer
 LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 940 HLS 24RS 1912
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: June 3, 2024 3:03 PM Author: TURNER
Dept./Agy.: University Systems/Division of Administration/Treasury
Subject: Appropriation debt authority for HIED capital projects Analyst: Deborah Vivien
CONTINUED EXPLANATION from page one: Page 2 of 2
EXPENDITURE EXPLANATION CONTINUED FROM PAGE ONE
In the bond market, appropriation dependent debt is rated lower than general obligation debt, typically resulting in higher
interest costs. According to State Bond Commission (SBC), assuming a simple all-in cost of up to 5% interest at level
debt over 20 years issuing $350-500 M per year up to $2.0 B, debt service would require roughly $150 M per
year in SGF once all bonds are sold. With the bill in its current form without a dedicated revenue stream, it is
anticipated that the bonds would be paid with SGF should State Bond Commission approve the authorization to
sell the bonds. The bill disallows bond sales until an appropriation is in place, though the required appropriation is not
specific to debt service or bond proceeds. The bill creates the College and University Deferred Maintenance and Capital
Improvement Fund which contains bond proceeds and can accept other deposits. Issuing debt will require an appropriation,
presumably within HB 2 for proceeds and/or HB 1 for debt service. The actual debt service requirements will depend on the
structure and timing of the bond issuance(s) and a revenue source other than SGF may be identified.
The bill provides the authority for corporations to incur appropriation-dependent debt through a conduit issuer of tax-exempt
bonds which may include the Louisiana Local Government Environmental Facilities and Community Development Authority
(LCDA) or the Louisiana Public Facilities Authority (LPFA). Since tax-exempt bond proceeds must be spent within about 3
years of issuance, and these projects entail extensive renovations given the authorized amounts, it is likely that bond sales,
and corresponding debt service, will occur over time instead of as one $2.0 B issuance. Further, since FP&C is administering
ongoing higher education deferred maintenance projects, site coordination may be required to accommodate campus
disruptions, which could also impact bond sale timing and debt service expenditures by fiscal year.
As bonds are sold, the funds required to service the debt will be added to net state tax supported debt (NSTSD) and included
under the debt capacity calculation (debt service is limited to 6% of gross state general fund revenue as adopted by the
Revenue Estimating Conference). NSTSD is an obligation of the state and, by practice, appropriation dependent debt will be
prioritized in the budget, even if subject to appropriation. The State Bond Commission estimates that bond issuances of
$350-500M annually up to $2.0B can be accommodated under the current debt limit assuming the REC forecast does not
change.
Creating a new statutory dedication within the state treasury will result in a marginal workload increase for the Department
of Treasury, which can generally be absorbed within existing resources. However, to the extent other legislative instruments
create new statutory dedications, there may be additional costs associated with the aggregate effort to administer these
funds.
As a note, any tax reforms or other circumstances that reduce the SGF forecast could lower the debt limit and may constrain
future bond sales if debt service on all state debt, which may be higher due to this bill, exceeds the limit.
The debt service obligation resulting from this bill will count against the state expenditure limit since the debt service is
appropriated.
Act 360 bond proceeds (not debt service) are deposited with a trustee for use by the corporation in administering the
projects named in law and remain off-budget for state budgeting purposes. This bill appropriates bond proceeds annually,
presumably in the operating budget through the fund created in the bill. Unless the appropriation is the total of available
bond proceeds, project delays could be possible.
Senate Dual Referral Rules House
x 13.5.1 >= $100,000 Annual Fiscal Cost {S & H} x 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
13.5.2 >= $500,000 Annual Tax or Fee Alan M. Boxberger
6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} or a Net Fee Decrease {S} Legislative Fiscal Officer