Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                        February 21, 1995

 TO:     Honorable Tom Craddick, Chair          IN RE:  House Bill No. 900
         Committee on Ways & Means                      By: Grusendorf
         House of Representatives
         Austin, Texas

FROM: John Keel, Director

In response to your request for a Fiscal Note on House Bill No.
900 (Relating to a franchise tax and property tax credit for
certain corporations for payment of certain tuition.) this office
has determined the following:

The bill would establish a franchise tax credit  for corporations
that fund private school scholarships for disadvantaged children. 
A local school district governing board would be authorized to
provide a credit against property taxes.  In addition, the bill
would require the commissioner of education to reduce the average
daily attendance of a school district for the year preceding the
first year a student attends private school under a scholarship
funded by a corporation.

The amount of the credits is limited to the lesser of the cost of
the tuition or 50 percent of the state's tier one share per
student under the Foundation School Program. 

The bill would be effective 90 days after passage.  If approved
by local school boards for the 1995-96 fiscal year, the property
tax credit would be effective for payments due December 31, 1995. 
The franchise tax credit would be effective for tax reports
originally due on or after January 1, 1996.

Because the number of tax credits to be issued is not known, the
fiscal implications cannot be estimated.  However, the credit is
limited to the amount of tuition or the tier one state aid per
student whichever is less.  In 1994-95, the statewide average
tier one allotment per student is approximately $1,850.    

Reducing a district's ADA in the year prior to first year of 
attendance in private school would cause the district to lose the
full cost of the tier 1 regular program allotment, technology
allotment and teacher compensation allotment, plus one weighted
ADA in the second tier.  On average for the 1994-95 school year,
the combined loss these local district programs would be $3,400
for each student receiving a scholarship.  For 85 percent of the
students the entire $3,400 would be a loss in state aid.  The
loss in state aid for the remainder would be approximately $2,500
per student.

If the bill is effective for the 1995-95 school year, students
that receive a scholarship in 1995-96 would result in reductions
to 1994-95 entitlements for local districts.  This would affect
the settle-up process for the 1994-95 school year which takes
place in 1995-96.

The fiscal implication to  the State or units of local government
cannot be determined.

Source:   Comptroller of Public Accounts, Central Education
Agency - Administration
          LBB Staff: JK, DD, DH, DF