LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 23, 1997
TO: Honorable Paul Sadler, Chair IN RE: House Bill No. 318, Committee Report 1st House, Substituted
Committee on Public Education By: Cuellar
House
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-Committee Report 1st House, Substituted
Implementing the provisions of the bill would result in a net
(negative) impact of $(925,500-9,225,000) 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 significantly changes 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.
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:
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.
No significant fiscal implication to units of local government
is anticipated.
Source: Agencies: 701 Texas Education Agency - Administration
LBB Staff: JK ,DH ,UP