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 SB1873 ( relating
to public school finance, including the abolition of the foundation
school fund budget committee) this office has detemined the
following:
Biennial Net Impact to General Revenue Funds by SB1873-Conference Committee Report
Implementing the provisions of the bill would result in a net
negative impact of $(28,000,000) 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 abolish the Foundation School Fund Budget Committee.
Many of the responsibilities related to funding elements would
be reassigned to the Legislative Budget Board.
The bill would
extend the hold harmless provision for local school districts
subject to equalized wealth sharing through the 1999-2000 school
year and exempt debt service tax rates from recapture provisions.
The bill would also remove authorization to count optional
extended year attendance in the count of total attendance for
school districts.
The bill would make recognition of property
value declines specifically subject to appropriation and authorize
the use of estimated data in the appropriations act for cash
flow purposes
Districts with wealth above the equalized level
of $280,000 per weighted pupil must reduce their property wealth
to the equalized level. Under current law, such districts are
entitled to a "hold harmless" that is in place until the end
of 1997-98. The hold harmless enables districts to retain a
portion of their tax bases above the equalized level. The wealth
level to which they must reduce is that which would--at a tax
rates of $1.50--enable them to maintain revenue (state and local)
equal to their M&O revenue for the 1992-93 school year, less
their current Available School Fund Allocation per weighted
pupil.
The bill also exempts debt service tax rates from
wealth sharing provisions and exempts revenue deposited into
tax increment funds from school district's revenues.
Methodolgy
The bill would retain the hold harmless provision applicable
to districts above the equalized level for another two years.
In 1996-97, approximately $2.3 billion of the tax base was
not recaptured due to the current hold harmless, costing the
state approximately $27.4 million in recapture funds.
The
elimination of recapture from debt service tax rates would reduce
the amount of recapture by approximately $28 million per year.
These costs have been included in estimates for HB 1 and HB
4.
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 Revenue
Gain/(Loss) from
Foundation
School Fund
0193
1998 $0
1998 (28,000,000)
2000 (28,000,000)
2001 0
2002 0
Net Impact on General Revenue Related Funds:
The probable fiscal implication to General Revenue related funds
during each of the first five years is estimated as follows:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 $0
1999 (28,000,000)
2000 (28,000,000)
2001 0
2002 0
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
Local school districts subject to wealth sharing would be able
to retain a greater portion of their local property tax revenues
through the 1999-2000 school year.
Source: Agencies:
LBB Staff: JK ,RR ,DD