LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
May 14, 1997
TO: Honorable Teel Bivins, Chair IN RE: House Bill No. 318, As Engrossed
Committee on Education By: Cuellar
Senate
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB318 ( Relating
to the public education grant program.) this office has detemined
the following:
Biennial Net Impact to General Revenue Funds by HB318-As Engrossed
Implementing the provisions of the bill would result in a net
(negative) impact of $(922,500-9,225,000) to General Revenue
Related Funds through the biennium ending August 31, 1999
The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.
Fiscal Analysis
The bill would significantly change both the eligibility requirements
and the funding mechanism for the Public Education Grant Program
(PEG).
Changes to Eligibility:
This bill significantly
increases the number of campuses which meet eligibility criteria.
The bill permits a campus to be considered eligible if in any
of the last three (3) years more than 50% of the students did
not perform satisfactorily on a TAAS test. Current law requires
that that level of performance be met in each of the last three
years. More than 2,000 campuses would have been identified
based on the three most recent years of data, involving more
than 1.2 million students.
Districts would be permitted to
reject students seeking to attend school with a PEG only if
95% of the positions at the grade level for which a student
applies are already filled. School districts would be required
to notify parents of all students assigned to campuses which
meet the criteria for the PEG program that the campus qualifies
and the student is eligible for a grant.
Changes to Funding
Mechanism:
Section 29.203 stipulates that Foundation School
Program formula funding amounts of the receiving (or educating)
district are used to calculate the grant amount. These amounts
are equivalent to the amounts which would be generated for a
typical transfer student, and are therefore assumed to have
no direct fiscal implications for the state.
Sections 29.203
and 42.4101 provide additional assistance under the facilities
program, but only about 26% of districts receive that assistance.
It appears that the amount of assistance would be about equal
to that provided under current law, and therefore is expected
to have no significant impact.
Section 42.157 creates the
Public Education Grant Allotment. This allotment is equal
to 10% of the adjusted basic allotment and would likely average
about $267 based on the current average adjusted basic allotment
amount. This allotment would also tend to increase the number
of weighted students used in calculating the guaranteed yield
amounts.
In addition, districts which do not receive funding
in the second tier guaranteed yield program would be eligible
for additional funding to the extent that actual costs of services
exceed the amount of benefit in the Foundation School Program.
While this would increase costs to the state, it is unclear
how much this calculated excess cost would be. The typical
amount of extra funding available in the guaranteed yield is
about $1100 per weighted student, although the actual amount
is variable, and would apply to approximately 10% of the participants.
Methodolgy
Pursuant to current law, 652 campuses with 491,005 students
were eligible for a PEG grant in 1995-96. Of these, 31 students
actually requested and received a Public Education Grant (.006
percent). Due to the significantly broader eligibility requirements
in the bill, and the financial incentive provided in the bill,
this estimate assumes a much higher rate of program participation.
This
estimate provides two scenarios: in the first, program participation
is 0.1% (roughly 1,200 participants) the second scenario estimates
a participation rate of 1% (12,000 students). Scenario 1 results
in a cost of $320,000 in the first year due to the allotment,
plus $130,000 for the excess costs associated with PEG participation
in higher wealth districts, for a total first year cost of about
$450,000. At a participation rate of 1% (Scenario 2), the cost
of the allotment would reach about $3,200,000 in the first year,
plus $1,300,000 pursuant to the higher wealth districts for
a total first year cost of about $4,500,000.
Both scenarios
assume an annual growth in participants of 5%.
The probable
fiscal implications of implementing the provisions of the bill
during each of the first five years following passage is estimated
as follows:
The probable fiscal implications of implementing the provisions
of the bill during each of the first five years following passage
is estimated as follows:
Five Year Impact:
Fiscal Year Probable
Savings/(Cost)
from Foundation
School Fund
0193
1998 ($450,000)
1998 (472,500)
2000 (496,125)
2001 (520,931)
2002 (546,977)
Fiscal Year Probable
Savings/(Cost)
from Foundation
School Fund
0193
1998
1999 (4,725,000)
2000 (4,961,250)
2001 (5,209,312)
2002 (5,469,778)
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
As engrossed, the bill would require a specific notice to be
sent to the parents of students assigned to low performing schools.
The number of notices is estimated to be $1.2 million. Estimated
cost to local school districts of sending the notice as required
by the bill is $450,000 annually.
Source: Agencies:
701 Texas Education Agency - Administration
LBB Staff: JK ,LP ,UP