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