LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
May 31, 1997
TO: Honorable Bob Bullock Honorable James E. "Pete" Laney
Lieutenant Governor Speaker of the House
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-Conference Committee Report
Implementing the provisions of the bill would result in a net
(NEGATIVE) impact of $(773,266-6,196,072) to General Revenue
Related Funds through the biennium ending August 31, 1999
Fiscal Analysis
Section 1 of the bill would add two new categories of open-enrollment
charter schools. The State Board of Education would be authorized
to grant up to 100 charters for open-enrollment charter schools
that adopt an express policy providing for the admission of
students eligible for a public education grant. Also, the Board
would be authorized to grant an unlimited number of additional
charters for open-enrollment charter schools for which at least
75% of the prospective student population will be students who
have dropped out of school or are at risk of dropping out of
school as defined by TEC 29.081.
Section 2 of the bill alters
the existing Public Education Grant Program by altering the
amount of the grant and by changing the eligibility requirements
for the program to include campuses at which 50% or more of
students did not perform satisfactorily on the TAAS in any two
of the preceding three years. It would continue grants even
when the campus from which a student comes is no longer considered
low performing.
Methodolgy
Section 1
This analysis assumes that the number of charter
schools would grow gradually. Although the provisions of the
bill would allow up to 100 public education grant charters and
an unlimited number of dropout prevention charters, this analysis
assumes that the number of new charters approved for each category
would be 20 per year for a total growth rate of 40 new charters
per fiscal year. It is estimated that the agency would need
an additional 1 FTE for each group of 40 new charters.
If
the students enrolling in the charter schools are currently
enrolled in public school, they represent no additional cost
to the state. Each student enrolling in a charter school who
is not currently enrolled in a public school represents an additional
cost of approximately $4,900 to the Foundation School Program.
Section 2
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 natural growth in
program participation and the financial incentive provided in
the bill, this estimate assumes growth in the rate of student
participation.
The conference committee report broadens the
eligibility criteria for program participation to include campuses
at which during any two of the three preceding years 50% or
more or the students did not perform satisfactorily on a TAAS
instrument. A total of 1,153 campuses with approximately 796,846
students would have been eligible for PEG grants for the current
school year under this eligibility criteria.
The bill
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.
The bill provides 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.
Districts educating
students with a PEG are eligible to receive an additional allotment,
calculated to be 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.
Given the low participation in
the first year, this estimate provides two scenarios with different
rates of participation. The first scenario assumes 0.1% of
eligible students would participate, or roughly 797 students.
At this level, the additional assistance in the form of the
extra allotment would cost about $212,799 per year. In the
second scenario of a participation rate of 1%, cost of the allotment
would reach about $2,127,990 each year. The effect of extra
allotments in the second tier of funding is approximately 40%
of the cost in the first tier. This would raise the financial
impact to the state to about $297,919 per year for 0.1% participation,
and to about $2,979,190 for 1% participation.
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:
Five Year Impact:
Fiscal Year Probable Probable Change in Number
Savings/(Cost) Savings/(Cost) of State
from General from Foundation Employees from
Revenue Fund School Fund FY 1997
0001 0193
1998 ($56,911) ($293,919) 1.0
1998 (113,822) (308,614) 2.0
2000 (170,733) (324,045) 3.0
2001 (227,644) (340,247) 4.0
2002 (284,555) (357,260) 5.0
Fiscal Year Probable Probable Change in Number
Savings/(Cost) Savings/(Cost) of State
from General from Foundation Employees from
Revenue Fund School Fund FY 1997
0001 0193
1998 ($56,911) ($2,939,190) 1.0
1999 (113,822) (3,086,149) 2.0
2000 (170,733) (3,240,456) 3.0
2001 (227,644) (3,402,478) 4.0
2002 (284,555) (3,572,602) 5.0
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
No significant fiscal implication to units of local government
is anticipated.
Source: Agencies:
LBB Staff: JK ,LP ,UP