Austin, Texas
                                   FISCAL NOTE
                               75th Regular Session
                                  May 6, 1997
      TO: Honorable Paul Sadler, Chair            IN RE:  Senate Bill No. 1158, As Engrossed
          Committee on Public Education                              By: Luna,Gregory
          Austin, Texas
         FROM:  John Keel, Director    
In response to your request for a Fiscal Note on SB1158 ( Relating 
to regional education service centers.) this office has detemined 
the following:
         Biennial Net Impact to General Revenue Funds by SB1158-As Engrossed
No significant fiscal implication to the state is anticipated.
Bill Summary

This bill would reauthorize and redirect the 
regional education service centers (ESCs) by amending Chapter 
8 of the Texas Education Code.  The bill would expand their 
focus from the provision of "core services" to include assisting 
schools in improving student performance and enabling schools 
to operate more efficiently and economically.  It would also 
provide more centralization in the management of ESCs and allocate 
more power and authority in this sphere to the commissioner. 
 It would take effect immediately, except for Section 8.121 
dealing with funding, which would take effect September 1, 1997 
(existing ESC funding expires on August 31, 1997). 

The bill 
delineates the following changes:

It would allow the commissioner 
(rather than the Texas Education Agency) to establish and operate 
a system of regional ESCs and to adopt rules for the membership 
of ESC boards (rather than the State Board of Education (SBOE)). 
 The commissioner would select the number of centers, locations, 
boundaries, and the allocation of state and federal funds among 
centers (current law limits the number of ESCs to 20).  Data 
reporting requirements and accountability standards, the minimum 
of which are specified in the bill, also would be established 
by the commissioner.  The board of directors would not be involved 
in program planning and evaluation (as they are under current 
law) but would be required to adopt a budget after conducting 
a public hearing on the center's performance during the preceding 

Districts would not be required to purchase services 
from ESCs or a specific ESC but be would be free do so from 
any of them.  In addition to improving student performance, 
the mission of ESCs would be to help districts operate more 
efficiently and economically and to implement initiatives assigned 
by the legislature or commissioner.   ESCs would continue to 
provide core services, such as training teachers and assisting 
specific needs of academically low-performing schools.

bill would exempt ESCs and their employees from taxation in 
the same manner as school districts and their employees.  It 
would also provide immunity from liability to ESC employees/volunteers 
to the same extent as district employees/volunteers.  It would 
allow ESCs to credit accumulated personal leave by a center 
employee who was formerly a state or school district employee 
(and vice versa).  With the commissioner's approval, ESCs would 
be able to purchase, lease, or sell property and acquire debt. 

ESCs would have to submit to the commissioner a yearly improvement 
plan that must include services to be provided to low performing 
campuses and services to enable districts to operate more economically. 
 An annual performance evaluation conducted by the commissioner 
would include a review of client satisfaction.  The commissioner 
(rather than the SBOE) would develop a system of sanctions for 
ESCs that are deficient in performance.  

In the section 
outlining the powers of the SBOE with regard to ESC, the bill 
would eliminate the role of the SBOE in the adoption of rules 
for the ESC board and the receipt and expenditure of grants. 
 Several former ESC functions relating to reporting and performance 
contracting for additional services to districts would be eliminated 
by the bill.  

The commissioner would fund ESCs based on 
services provided to improve student performance, including 
a minimum allotment and an additional amount based on number 
of campuses served.  The ESC statewide total allotment may not 
be less than .4 percent of the amount appropriated to the Foundation 
School Program.  The commissioner would be authorized to establish 
and allocate an incentive fund for ESCs to encourage efficiency. 
 Funds for legislative initiatives and innovative and emergency 
grants may be appropriated by the legislature.

Fiscal Analysis

significant fiscal impact to the state is anticipated.  The 
modification of ESC responsibilities and services that are specified 
in the bill would be accomplished with existing personnel and 

The bill specifies that funding could not be less 
than .4 percent of the amount appropriated to the Foundation 
School Program (FSP).  Assuming that the FSP appropriation is 
about $9 billion, the ESC allocation would be not less than 
about $36 million, and is estimated to be approximately $40 
to $42 million.  Currently, the legislature appropriates $23 
million from the Foundation School Fund (FSF) for the provision 
of core services and the general administration of the centers. 
 Another $17 to $19 million is expended from other state sources 
($11 million from general revenue and $8 million from the Telecommunications 
Infrastructure Fund for the long-range technology plan).  

bill would consolidate most funding so that it would be allocated 
from one source in the FSP.  However, it would authorize specific 
legislative appropriation from other sources.  There would be 
no net fiscal impact to the state as a result of this bill. 

Administrative Costs to Local Government

This bill is designed 
to improve the efficiency and cost-effectiveness in the provision 
of educational services by school districts by allowing more 
district flexibility in their selection of an ESC or other entities 
to provide educational services.  This could result in a cost 
savings to districts, but these costs savings would vary depending 
on local choices and are not anticipated to be significant. 

The fiscal implications noted above would be likely to 
continue beyond 2002. 

   Source:            Agencies:   701   Texas Education Agency - Administration
                      LBB Staff:   JK ,DH ,LP ,GJ