LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 10, 2001
TO: Honorable Paul Sadler, Chair, House Committee on Public
Education
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB1084 by Hochberg (Relating to the cost of education
adjustment.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB1084, As Introduced: negative impact of $(2,267,500,000) *
* 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. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(1,131,600,000) *
* 2003 (1,135,900,000) *
* 2004 (1,134,500,000) *
* 2005 (1,136,100,000) *
* 2006 (1,182,800,000) *
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All Funds, Five-Year Impact:
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* Fiscal Year Probable Savings/(Cost) from *
* Foundation School Fund *
* 0193 *
* 2002 $(1,131,600,000) *
* 2003 (1,135,900,000) *
* 2004 (1,134,500,000) *
* 2005 (1,136,100,000) *
* 2006 (1,182,800,000) *
*****************************************************
Fiscal Analysis
The bill directs the Commissioner of Education to adopt a new cost of
education index to replace the one in current law. The bill generally
describes an index that must be adopted, but does not specifically define
one. It would provide that no district's index value be less than the
index used in the 2000-01 school year. It directs that the same index be
used for the next five fiscal years, and sets up a five-year review
cycle to determine new index values.
The bill also modifies the calculation of weighted average daily
attendance (WADA) by striking a phrase that limits the effect the cost
of education index has on the computation of WADA.
Methodology
The Texas Education Agency ran a model of the school finance system using
a salaries and benefits index recently published by the Charles A. Dana
Center. In addition, the computation of WADA was appropriately adjusted
as required by the bill.
The changes affect both state aid and the revenues expected from
recapture. For the purposes of this fiscal note, both types of changes
are reflected as a cost to the Foundation School Fund, as noted above.
It is estimated that the application of the cost of education index
alone accounts for $1.4 to $1.5 billion of the $2.27 billion biennial
cost. Adding the adjustment to WADA to the new cost of education index
makes up the remainder, or an additional $800 to $900 million cost to
the state for the biennium.
Local Government Impact
School districts would experience increases in revenues as a result of
the changes in this bill.
Source Agencies: 701 Texas Education Agency
LBB Staff: JK, CT, JM