Austin, Texas
                                   FISCAL NOTE
                               75th Regular Session
                                  April 1, 1997
      TO: Honorable Teel Bivins, Chair            IN RE:  Senate Bill No. 1158
          Committee on 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 Introduced
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 change the focus 
from the provision of "core services" to 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 improvement in 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. 

The bill would exempt 
ECSs 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. 
 Previous ESC functions consisting of providing "core services," 
some reporting requirements, and performance contracting for 
additional services to districts would be eliminated by the 

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

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).  

This 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 ,LP ,GJ