LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              March 19, 2001
  
  
          TO:  Honorable Paul Sadler, Chair, House Committee on Public
               Education
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB6  by Dunnam (Relating to open-enrollment charter
               schools.), As Introduced
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HB6, As Introduced:  positive impact of $0 through the biennium       *
*  ending August 31, 2003.                                               *
*                                                                        *
*  The bill would make no appropriation but could provide the legal      *
*  basis for an appropriation of funds to implement the provisions of    *
*  the bill.                                                             *
**************************************************************************
  
General Revenue-Related Funds, Five-Year Impact:
  
          ****************************************************
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2002                                   $0  *
          *       2003                                    0  *
          *       2004                                    0  *
          *       2005                                    0  *
          *       2006                                    0  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
***************************************************************************
*Fiscal    Probable Savings/(Cost) from     Change in Number of State     *
* Year       Federal Funds - Federal          Employees from FY 2001      *
*                      0555                                               *
*  2002                        $(119,804)                             2.0 *
*  2003                         (119,804)                             2.0 *
*  2004                          (59,902)                             1.0 *
*  2005                          (59,902)                             1.0 *
*  2006                          (59,902)                             1.0 *
***************************************************************************
  
Fiscal Analysis
  
Section 12.106 of the bill amends state funding processes to allow a
charter recipient to receive funding for the open-enrollment charter
school under Chapter 42, as if it were a school district without a Tier 1
local share for purposes of Section 42.253 and without any local revenue
for purposes of Section 42.302.  In determining funding for an
open-enrollment charter school, certain adjustments and the district
enrichment tax rate would be based on the average adjustment and average
district enrichment tax rate for the state.  This change in charter
school funding would have a negligible effect (less than 1% difference)
on the amount of state funds paid to charter schools.

The bill places additional costs on the Texas Education Agency (TEA)
relating to state oversight.  The bill  requires TEA to study charter
school innovation, establish a registration process for management
companies, and oversee the application to charters of laws that apply
currently to school districts.  An estimated two additional employees
would be needed to carry out these duties.  These two positions, at an
annual cost of $119,804, should be funded with federal revenues.  The
cost would drop in fiscal year 2004. The bill directs funds collected
from management company registration fees to be used for the
administration of that subchapter (E).  As a result, it is estimated
that this bill would have no fiscal impact to General Revenue.
  
  
Methodology
  
The change in charter school funding effected by the bill would have a
negligible effect (less than 1% difference) on the amount of state funds
paid to charter schools.

The bill places additional costs on the Texas Education Agency (TEA)
relating to state oversight.  The bill  requires TEA to study charter
school innovation, establish a registration process for management
companies, and oversee the application to charters of laws that apply
currently to school districts.  An estimated two additional employees
would be needed to carry out these duties.  These positions, at an annual
cost of $119,804, should be funded with federal revenues.  The cost
would drop in fiscal year 2004. The bill directs funds collected from
management company registration fees to be used for the administration of
that subchapter (E).  As a result, it is estimated that this bill would
have no fiscal impact to General Revenue.

Other costs would be expected to be absorbed by the agency.  The
moratorium on new awards of charters would make it possible for the
agency to redirect some existing resources to some of the new activities
required by the bill.
  
  
Local Government Impact
  
Under the funding changes in section 12.106 of the bill, there could be
significant variance among individual charter schools in the amounts to
be paid and in the gains or losses of funding under this legislation.

For the most part, the bill clarifies the applicability of state laws and
procedures to open-enrollment charter schools.  There may be some
increase in the cost of operating charter schools that comply with the
provisions of this bill, but those increases would vary from school to
school.  No single provision has a clear and definitive cost implication
to all charter schools.
  
  
Source Agencies:   405   Texas Department of Public Safety, 705   State
                   Board for Educator Certification, 701   Texas
                   Education Agency
LBB Staff:         JK, CT, PF, JM