LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 16, 2001
TO: Honorable Paul Sadler, Chair, House Committee on Public
Education
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB868 by Dutton (Relating to elementary school class
size limits.), As Introduced
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB868, 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 (186,077,000) *
* 2005 (186,077,000) *
* 2006 (186,077,000) *
****************************************************
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Savings/(Cost) from *
* General Revenue Fund *
* 0001 *
* 2002 $0 *
* 2003 0 *
* 2004 (186,077,000) *
* 2005 (186,077,000) *
* 2006 (186,077,000) *
*****************************************************
Fiscal Analysis
The bill limits class enrollment in grades kindergarten through three to
no more than ten students. It also limits class enrollment for grades
four through six to no more than 15 students.
The bill takes effect September 1, 2001; however, the class enrollment
limits would apply beginning with the 2003-2004 school year.
Methodology
The changes proposed to maximum class sizes for grades kindergarten
through six have no effect on formulas generating aid under the
Foundation School Program. However, there would be additional state
Teacher Retirement System state retirement and group insurance costs
associated with new teaching and support staff that would be required
under the bill.
The Texas Education Agency (TEA) assessed the bill's impact based on an
analysis of the limited class size data provided in the PEIMS data
collection was conducted using school year 2000-01 data. Based on this
analysis, about 52,000 full-time teachers would be needed in 2000-01 in
grades kindergarten through three to meet the ten-student class size
limit (allowing variation to reflect efficient use of local resources)
about 19,000 full-time teachers would be needed in 2000-01 in grades four
through six. Because the bill would not actually take effect until
2003-2004, it is likely a larger number of teachers would be needed at
all grade levels due to enrollment growth. In addition to the 71,000 new
teachers, about 3,550 additional support and leadership staff would be
required.
Applying a Teacher Retirement System contribution rate of 6 percent for
retirement and 0.5 percent for retiree group insurance results in a
total cost of $186,077,000 per year to the state.
Local Government Impact
As noted above, the changes proposed to maximum class size have no effect
on formulas generating aid under the Foundation School Program. Because
the bill neither results in additional state aid nor specifies a
contingency appropriation, for the purpose of this estimate it is
assumed that additional costs would be borne solely by local school
districts. TEA estimates that local operating costs associated with the
proposed class size limitations would be $3.0 billion annually beginning
in fiscal year 2004. Costs for facilities would be about $7.1 billion
but would likely be financed through debt, which would significantly
lower the cash outlays in the short term.
Source Agencies: 701 Texas Education Agency
LBB Staff: JK, CT, RN